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Market Commentary 1/27/17

Posted on January 27, 2017 by Damon Germanides

The Dow’s climb above 20,000 was all the buzz of this week. However in other news, housing and economic data were not so rosy. New home sales fell sharply in December as a result of both increased housing prices and interest rates. Also, Gross Domestic Product (GDP) growth in the final quarter of 2016 was weaker than expected. GDP grew by 1.900% in the last quarter of 2016, below the 2.2% expected and down from the 3.5% reported in the third quarter. Overall, in 2016 GDP grew by a tepid 1.9%, down from 2.6% in 2015 and it was the worst showing since 2011.

Bond yields are trading modestly lower in response to both the poor GDP and the slow economic growth.
With rates virtually unchanged this week, we continue to closely monitor the 10-year Treasury Bond, which is trading a tad under 2.500%. We remain biased toward advising clients to lock in interest rates, although we could foresee the possibility of a small drop in interest rates given the current economic and political environment.

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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.