Colorado Home Mortgage Loan

GDP growth came in at .6% which is only .1% higher then the expected.  When expectations are exceeded investor confidence is high.  When investor confidence is high investors tend to pull money out of Mortgage Backed Securities and into Stocks.  This will cause Colorado Home Loan rates to increase as the price of bonds decrease.  This was not the case today, primarily because it did not beat expectations by much and more importantly the current GDP level still sucks.  Colorado Home Loan rates will be unaffected by the higher numbers here.  With in the GDP report you have a number of variables that are analyzed to get GDP numbers.  Durable and Non-Durable goods spending was down and reported lower then any reading since 1991.  We had a recession going on during this time.  Colorado Home Loan rates tend to improve on this type of information.  In fact all of the numbers in the GDP report came in much lower then expected except for Services spending which was the only variable to show any type of growth.  It also was the only reason we had GDP come in higher then expected.

Chicago’s PMI reported a bit higher then expected as well.  The expectation was 47.5 and the data came in at 48.3.  Again, not enough to make any major shifts in the Colorado Home Loan market.  Remember from a previous blog that when the index number comes in below 50.0 manufacturing actually experiences a contraction in the market.  If GDP contracted it would be defined as a Recession (just though you should know).  So even though PMI reported higher it still reported contraction.  Contraction in manufacturing causes concerns for economic growth.  These concerns send investors back to buying safe investments like Mortgage Backed Securities.  When Security demand is up, Colorado Home Loan rates drop.  So all in all, this report did not surprise anyone enough to make the Colorado Home Loan market move.

We did have one inflationary report come out and that was Employment costs.  It was projected to be up .8% however it came in at .7%.  Not much of a difference, but it does send a signal that inflation is not getting out of control.  Anytime I report good inflation numbers I want to put a little caution as it relates to oil.  Oil will be the thorn in our markets foot.  Colorado Home Loan rates will be impacted by inflationary pressures due to oil.  It is inevitable, to what extent will still be determined.  Regardless this report will have a positive impact on Colorado Home Loan rates.

Finally, we did have one employment report come out.  Like all employment reports it is a survey done by an independent survey company.  Some employment reports have significant credibility like the Bureau of Labor Statistics and some have less credibility.  ADP employment numbers indicated an increase in jobs by 10,000 for April, though not always accurate can give us a preview of what may come.  High Job numbers indicate economic recovery and in return cause the demand for Mortgage Backed Securities to drop.  As a result Colorado Home Loan rates will go up. 

Looking at all the reports that are out today and waiting in anticipation of what will be released by the Federal Open Market Committee it is clear why Colorado Home Loan rates appear to be flat right now.  I just checked the Mortgage Backed Securities ticker and it appears we are slightly up in price.  This means a slight improvement for Colorado Home Loan rates.  Not enough to make the rate change, but at least a good directional indicator.  The FOMC will certainly create movement later today and it appears that investors are standing by in anticipation of this information.  I will keep you posted on the information released and for the time being will continue to keep our FLOAT recommendation for Colorado Home Loan rates.  We are in for a bumpy ride, but waiting can pay off in the long run.  If you are not prepared for the ride we should have locked you yesterdayJ  At this point you are buckled in and we a hearing the clanks of the rollercoaster as it goes up the ride.  We are hoping that we hear the sweat sound of air blowing through our hair as we ride the coaster down.  The FOMC will be the deciding factor for this.  In the mean time Good Luck and Call me with your Colorado home loan questions.