The first estimate of economic growth for the third-quarter indicted a late burst in consumer spending offset the first cutbacks in investment in more than a year by cautious businesses.

Gross Domestic Product, a number intended to represent the value of all goods and services produced in the nation, expanded at a 2.0% annual rate during the third-quarter according to data compiled by the Commerce Department.  The third-quarter gain was a substantial improvement over the second-quarter’s pace of 1.3%.

One reason GDP came in a bit stronger than most analysts were expecting was due to the strength in federal government expenditure. According to BNP Paribas economists, what really was going on here was an increase in defense maintenance costs, which in fact was estimated by the government; which dramatically increases the probability this data will be revised downward in the future.  Government spending accounted for 0.7% of the third-quarter GDP growth.  Most experienced mortgage investors were quick to discount the apparent surge in third-quarter economic activity as unsustainable rendering what would have otherwise been a potentially mortgage interest rate unfriendly report toothless.

Looking ahead to next week — Monday’s Personal Income and Spending Report for September and Friday’s October Nonfarm Payroll report will book-end an otherwise lightly populated economic calendar.   Mortgage investors have already priced in benign income and spending data and are largely anticipating Friday’s employment report will show the economy created 125,000 new jobs while the national jobless rate ticked higher to 7.9% from September’s 7.8% mark.  If these assessments prove accurate, the macro-economic news will tend to supportive of steady mortgage interest rates.

In the run-up to Friday’s nonfarm payroll report the trend trajectory of mortgage interest rates will be most influenced by trading action in the stock markets.  Higher stock prices will tend to drag rates higher while falling stock prices are almost certain to prove supportive of the prospects for steady to perhaps fractionally lower mortgage interest rates.

 

Mortgage Rates as of October 26, 2012 ( purchase transactions )

30 day rate locks, subject to credit score and loan to value edits

 

FHA

30 year fixed                  3.25%   0% origination fee

 

Conventional

30 year fixed rate           3.375%    (*LTV and credit score could impact this quote)  ( .50 origination fee, 760+ score)

      

15 year fixed rate           2.875%

 

5/1 ARM                        2.375%

 

7/1 ARM                        2.75%

 

Rates change constantly, call or email me for an update anytime!