Here’s the story of the day. Well, actually two stories but they both relate to the same issue—interest rates. Today the U.S. Department of Commerce released its first estimate of Q1 Gross Domestic Product, the total amount of all goods and services produced from January through March of this year. Economists expected slower growth, something closer to 1.0 percent yet the headline number reported much slower growth at 0.2 percent. Not totally surprising and much better than Q1 of last year when production actually shrank by -2.1 percent. Blame it on the weather the experts said.
Shortly thereafter the Fed wrapped up its most recent round of FOMC meetings and as always they released a brief statement allegedly outlining what the two day meetings were all about. The Fed comments indicated they were more likely than not to raise rates anytime in the near future. For those counting, May comes this Friday and we’re approaching the halfway mark of the second quarter.
A weaker economy and a cautious Fed should indicate mortgage rates and others will remain in their relative range toward the end of the year. Recall that Q2 and Q3 reported GDP at 3.5 and 4.5 percent respectively. That’s healthy growth. But we won’t see any Q2 data until late July. Bottom line? Don’t expect rates to go much lower and it’s a pretty safe bet rates for a 30 year fixed VA loan won’t rise above the 4.00 percent mark over the next several weeks. If you’re ready to buy that house and it’s time to lock, the prudent approach is to lock in now. Waiting is a gamble.
