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Market Commentary – 10/28/16

Posted on October 28, 2016 by Damon Germanides

Fears of global inflation have nudged mortgage bonds higher this week. Even with interest rates at historical lows, the era of negative interest rates appears to be over, at least for now. All of the major 10-year Treasury Bonds (Germany, Japan, UK, and US) are all yielding positive interest rates.

Gross Domestic Product (GDP) led the economic news this week. The government reported that the 3rd quarter GDP was much stronger than expected. As with many government reports, the real valuable information is found within the report; it’s not so much about the top-line growth rate. Delving into the report’s details reveals that consumer spending slowed and corporate investment on equipment fell for the 4th straight quarter.

Our experts envision interest rates going a bit higher, but the markets seem to be getting comfortable with a 10-year US Treasury Bond trading between 1.75% to 2.00%. At the moment, we are neutral on whether to float or lock interest rates at these levels.

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These are the opinions of the author. For financial advice, please talk to your CPA or financial professional.

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(2) Disclosures

(1) Minimum FICO, reserve, and other requirements apply. Contact your loan officer for additional program guidelines, restrictions, and eligibility requirements. Rates, points, APRs and programs are subject to change without notice. Actual closing times will vary based on borrower qualiﬁcations and loan terms. All loans are subject to credit approval. (2) “Loan to Cost” (LTC) is defined as the acquisition price of the property plus the cost to build as determined by a bank appraisal. Contact your loan officer for additional program guidelines, restrictions, and eligibility requirements. (3) With an interest-only mortgage payment, you will not pay down the loan's principal balance during the interest-only period. Once the interest-only period ends, your payments will increase to pay back the principal and interest. Rates are subject to increase over the life of the loan. Contact your Insignia Mortgage, Inc. loan officer to determine what your payments might be once the interest-only period ends. (4) With an adjustable rate mortgage (ARM), the loan payment will adjust after an initial period and then adjust on a regular basis as set forth in the loan documents. For example, a “3/1” loan will have an interest adjustment 3 years after the loan closes and every 12 months thereafter. Also, the loan will be subject to annual and lifetime adjustment caps. Contact your Insignia Mortgage loan officer to determine what your payments might be once the fixed rate period of the loan ends. (5) Insignia Mortgage, Inc., is a real estate broker licensed by the CA Bureau of Real Estate, DRE #01969620, NMLS #1277691.