Mortgage Market Guide: Gross Domestic Product Disappoints Again

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Mortgage Market Guide: Gross Domestic Product Disappoints Again

  In This Issue  

Last Week in Review: Gross Domestic Product limps along.

Forecast for the Week: Will the July Jobs Report bring joy or disappointment?

View: Trim office expenses with these six tips.

  Last Week in Review  

“Are you optimistic ’bout the way things are going?” Chicago. Although consumers and the Fed recently noted feeling pretty good about the economy, along comes Gross Domestic Product (GDP) to shatter that optimism.

Gross Domestic Product

Consumer Confidence held steady from June to July, with consumers remaining cautiously optimistic about personal income prospects and job growth in the near future, the Conference Board reported. Likewise, the Federal Open Market Committee (FOMC) noted that “near-term risks to the economic outlook have diminished.” Then came the first reading of second quarter Gross Domestic Product, the value of the goods and services produced in the United States.

The most recent GDP report was another stark reminder that the U.S. economy, which has been limping along for years, may actually be slowing further. The first look at second quarter GDP came in at an anemic 1.2 percent, which is far below the already downgraded estimates of 2.6 percent. Adding insult to injury, the final reading of first quarter GDP was revised lower still to 0.8 percent, from a previously reported 1.1 percent. When averaged out over the last four quarters, GDP has been an ugly 1.23 percent reading. The ideal GDP growth rate in a healthy economy is between 2 and 3 percent.

The FOMC will continue to closely monitor GDP, inflation as well as other economic and financial developments at home and abroad in its effort to foster maximum employment and price stability.

One positive economic sign again came from the housing sector. New Home Sales rose 3.5 percent from May to June, the Commerce Department reported. Plus, May was revised higher. Year-over-year New Home Sales experienced a 25.4 percent gain from June 2015, the highest level since February 2008. Double-digit increases were experienced in the West and Midwest, but sales fell 4.9 percent in the Northeast and 0.3 percent in the South. The median price for a new home rose 6.1 percent from a year ago to $306,700.

For now, home loan rates remain in historically low territory.

If you or anyone you know has any questions about home loan rates or products, please contact me.

  Forecast for the Week  
Everyone will be watching to see if the July Jobs Report matches May’s dismal data or jives with June’s more promising numbers.
  • National manufacturing data via the ISM Index will be released on Monday followed by the ISM Services Index on Wednesday.
  • Personal Income, Personal Spending and the inflation reading Personal Consumption Expenditures are due to be delivered on Tuesday.
  • Key employment reports begin on Wednesday with the ADP National Employment Report.
  • As usual, weekly Initial Jobless Claims will be released on Thursday.
  • Look for the July Jobs Report on Friday, which includes Non-farm Payrolls, Hourly Earnings and the Unemployment Rate.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds experienced an uptick recently following lackluster earnings reports and lower-than-expected GDP, keeping home loan rates in historic territory.

Chart: Fannie Mae 3.0% Mortgage Bond (Friday Jul 29, 2016)
Japanese Candlestick Chart
  The Mortgage Market Guide View…  

6 Simple Ways to Cut Office Expenses

While recurring office expenses may seem a standard part of doing business, here are six easy ideas for trimming those costs:

Turn off power strips and unplug items not in use. Computers and electronics consume power even when they aren’t in use (even those cell phone charger cords). Make power strips accessible, so they can easily be turned off overnight and only plug in other devices as needed.

Swap your lights for inexpensive LED bulbs. Even fluorescent tubes can now be affordably replaced (just make sure to recycle the tubes correctly).

Ditch your printer. An inexpensive scanner can digitize paper, receipts and all other documents. You can even create PDFs that can be digitally and legally signed. This action can save energy, paper, ink and storage expenses.

Outsource errands to couriers. Spend your limited time on income-generating activities, not trips to the post office, supply store, bank or dry cleaner. Hire a courier to do it for a fraction of the cost of your valuable time.

Trade your landline phone for Internet calling. Programs like Skype allow you to make and take phone calls through the Internet but also provide you with a real phone number and voicemail tools. Or, if you’re out of the office frequently, cancel your landline and use your cell phone as your main business number.

Review your insurance. You may be paying for riders, endorsements or other add-ons that are obsolete. Discuss potential cost savings with your agent.

Please feel free to pass these helpful tips along to your team, clients and colleagues.

Sources: OPEN Forum, When I Work

Economic Calendar for the Week of August 01 – August 05
Gross Domestic Product





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Questions, Comments or For more information you can contact Christian Penner at: Call/Text: (561) 373-0987 or visit us online at

The Christian Penner Mortgage Team, A Branch of 
American Financial Network, Inc

CORP NMLS# 237341 ; Equal Opportunity Employer ; Equal Opportunity Lender American Financial Network, Inc. 10 Pointe Drive, Suite 330, Brea, CA 92821.

Call/Text: (561) 373-0987

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Call/Text: (561) 373-0987


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