Dennis' Mortgage Blog

A crazy day in Lower Manhattan today as the politicians inched closer to a deal on the debt ceiling extension for the Treasury.  At opening the Dow Jones Industrial Average shot up 140 points, within two hours it had dropped almost 300 points from its high and then in the late part of trading closed almost where it opened, down 11 points.

As for Mortgage Backed Securities, they started the day flat from Friday's close and then started flying high with another big rally.  The rally did not translate into much better pricing with most lenders who are probably hedging into the debt ceiling news to find out exactly what will transpire since tomorrow is the deadline.

Lost in all the debt and deficit negotiations is what is happening in the economy, or rather has happened.  Before the debt ceiling was labeled a crisis situation with catastrophic consequences, way back in June and July, the economy was stalling.  As noted on Friday in my Weekly Rate & Market Update economic growth in the 1st Quarter of 2011 was revised to an anemic 0.4% growth of Gross Domestic Product and initial reports for the 2nd Quarter were 1.3% growth. 

Today more grim news as the Institute for Supply Management released its manufacturing index, a key piece of data on the economy.  In July the index dropped to its lowest level since July 2009, one month after the recession technically ended.  The index for July 2011 was 50.9, down from 55.3 in June.  An index over 50 shows growth in manufacturing and the economy.  Like the  GDP numbers for the 1st Quarter, the ISM index shines a very bright light on our economy. 

Unfortunately that light has been under a blanket of media coverage in Washington as our politicians have argued over how much more money to spend every year that exceeds our tax collections.

Until Congress and the White House understand the scope of the economic slow down and begin to repeal much of the legislation that has halted companies from expanding and growing we should prepare for continued bad economic news.  We are just on the edge of slipping back into recession, after not having recovered any jobs from the one that evidently ended in 2009.

Our elected officials and those they appoint that write the rules and regulations for business and commerce need a reality check, evidently they have missed the GDP, employment and manufacturing numbers.

Bad news is good news for mortgage rates, so if you are looking to purchase a new home or refinance your current one now is a great time.  Call me to see what we can do to assist you.