It looks as if the Democrats and Republicans finally made a deal to resolve the country’s debt problems! However, the economic woes continued to be highlighted in various reports last week, sending the 10 Year Treasury Note yield lower to 2.75% today, a new low for 2011! Mortgage rates remain at the best levels of the year, and refinance volume is picking up to approximately 70% of all new mortgage applications.
The S&P/Case-Shiller 20-City Home Price Index fell 4.5% in May from one year ago. Nineteen of the 20 cities in the index showed a year-over-year decline with Washington DC showing the only increase, up 1.3%. The 20-city index was up 1% from April 2011. New Home Sales decreased 1%, but the median sales price increased 7.2% from June 2010. The Fed’s Beige Book report said residential real estate activity remained weak and home prices were flat or declining. Durable Good Orders were down 2.1% for June and continue to point to a slow economy. Second quarter Gross Domestic Product (GDP) came in well below expectations at 1.3%, and the first quarter was revised from 1.9% to 0.4%. The US economy is and was weaker than data had suggested.
Currently, the 30 Year Fixed is 4.125% (4.291% APR) and the 15 Year Fixed is 3.250% (3.560% APR). This week offers a full slate of economic news and a potentially volatile environment for interest rates. Some of the reports include the ISM Manufacturing Index, Construction Spending, ADP private payroll employment numbers, Jobless Claims and the headline-grabbing Unemployment Rate.