While all eyes are on the ‘Debt Ceiling Debate’, the key news that affects rates came out this morning: The Gross Domestic Product. The GDP numbers show our economy is still growing but VERY, VERY slowly. Layoffs on the state and local government levels continue as states are forced to come to terms with lower income. The federal payrolls however keep growing, since the Federal Government does not have to constrain spending when revenue falls…at least not yet.
What this means is that there is less fear of future inflation and so rates, while they ticked up earlier this week, dropped back down as a result. Combine this with the ‘flight to safety effect’ as stocks sell off and investors put their money into bonds, and you have a very good day for rates.
Will the debt debate and possible downgrade have an impact on interest rates? Yes and no. You see, the US is still one of the best places to keep your money in times of economic worry. Even if downgraded, no one thinks that the US won’t pay on it’s Treasury Obligations, so for now, we are still among the best of the worst, investors still buy our bonds, and rates stay low. In the long term however, if we don’t get our house in order, we will see some increase.
This week Freddie Mac’s 30 yr. fixed rate survey ended up at 4.55% depending on program, credit and points.
WR Starkey Mortgage, LLP NMLSR # 2146
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Edmond, OK 73034