The mortgage market stumbled out of the gates a little bit this morning (did you see the stock market roaring early?) as investors reacted to the first estimate of the economy's overall growth rate during the last three months of 2010.
The headline Q4 GDP number posted showed consumer spending had its biggest gain in four years and less experienced traders were quick to latch onto this seemingly super-strong measure of economic growth as they aggressively pushed mortgage interest rates higher in the day's early trading.
BUT, numbers can be deceiving - especially if one fails to consider the broader view. More experienced traders were already watchfully aware that much of the driving force behind the surge in consumer spending last year resulted from heavy price discounting by retailers. The national consumer income numbers show households chose to dip into their savings to buy the offered goods and services at their "blue light" and "one-time only" special price. Coupled with reports of political strife in Egypt, long term fixed mortgage rates dropped to their lowest levels for the week.
Next week will be a busy week in terms of economic data to be released. The reports scattered through the earlier part of the week are expected to be generally mortgage market neutral and will therefore be overshadowed by the jobs number on Friday. Most analysts anticipate the economy created 150,000 more jobs in January than were lost while the national jobless rate is expected to tick up to 9.5% from December's 9.4%. Numbers that match or fall below these projections will tend to be supportive of steady to perhaps fractionally lower mortgage interest rates. In the unlikely case the actual numbers are stronger than currently projected look for your investors to push mortgage rates higher.
V.K. [Mel] Melhado PA
Fine Home Specialist
Preview Naples Properties, LLC