Weaker Economic Data Supportive of Low Interest Rates
Recent weak reports—about the GDP contracting and consumer sentiment going down—support a low interest rate environment.
The negative reports from the U.S. Commerce Department and the University of Michigan Consumer Sentiment Index contributed to a mild flight to safety rally on Friday May 29, 2015 that drove down 10-year T-Bill yields and mortgage rates.
The most impactful contributing report was the Commerce Department’s revised quarter-one GDP figures that showed the economy contracted 0.7 percent. While this is less than the 1.0 percent revision economist expected, it may nonetheless spoil hopes that the country would have grown an average of 3.0 percent over the last 12 months.
The University of Michigan’s announced on the same day that its Consumer Sentiment Index also fell to May reading of 90.7, from 95.9 in April. This is a six-month low for the index.
Housing data is a silver lining however as the unfavorable economic data supports the Fed’s continued patience in not yet raising short-term interest rates, which promotes buyer demand.
People looking to buy a home will find mortgage rates near all-time lows with conforming no point 30-year fixed rates averaging 3.75 percent and 15-year rates averaging 3.00 percent.
For more information on a home purchase, refinance, or a reverse mortgage, visit our website at Aramco.Biz or call me at (877) 700-0942. This is Mehran Aram with today's ARAMCO Report.