Mortgage Rate Update July 29, 2011

Posted on by Evan in Rate Update

Mortgage rates are better this morning.

A combination of uncertainty regarding debt negotiations in Washington DC & weak economic data is sending stocks and interest rates lower this morning.

A vote on House Speaker Boehner’s debt reduction proposal was delayed yesterday evening.  It is still unclear whether or not his plan will garner enough support to get out of the House of Representatives.  Even if it does the Senate has already announced that they’ll kill the bill.

With a few days left politicians remain divided.

The interest rate markets still believe a plan will get passed before the deadline but with all the political strife many analysts believe the US credit rating will get downgraded even if the country avoids default.  However, even if it does it is most investors will still view the US as the “safest” investment option.

In economic news, the Commerce Department reported earlier that 2nd quarter GDP came in at a tepid 1.3%.  Furthermore, they revised their initial 1st quarter growth rate down to 1.9%.  Even though the economy grew by a slower than expected pace core inflation actually rose which is concerning.  Overall, this is disappointing news which is helping to push yields lower this morning.

I will switch to a floating bias as rates test near-term low levels.

Current Outlook:  floating