Even if a debt ceiling resolution is in place, there is rampant speculation that the United States AAA credit rating is in jeopardy. There is even greater speculation about the aftermath that would occur, should the United States have its credit rating downgraded.

Manufacturing Sector Report Disappoints

The ISM Manufacturing index fell to 50.9 in July, down 4.4 points from June in data released by the Institute for Supply Management. The index fell to 50.9 in July, down 4.4 points from June, marking the sector’s slowest growth since July 2009. Analysts want to see a reading above 50 as that is the level where the manufacturing sector is considered to be growing. While the index has been above that level for two years straight, a reading of only 50.9 shows that growth is very flow, which disappointed analysts.

“The U.S. ISM manufacturing report for July is a shocker and strongly suggests that the disappointing performance of the economy in the first half of the year was not just temporary,” Paul Dales, senior U.S. economist with Capital Economics, said in a research note.

How Are Mortgage Rates Affected?

Continuing negative economic data as we have seen over the past months paints a picture of an economy that is struggling. This means that investors are more likely to flee stocks and push their money towards safer vehicles like bonds, which which can translate into lower mortgage rates. The data is bad, but for current or prospective home owners, it has extended a window of extremely low mortgage rates. Since rates are not expected to stay at these low rates, now may be the opportunity you have been looking for to lock in a new low rate for your existing or future mortgage.

Economic Calendar for Week of August 1, 2011

• Monday – Construction Spending
  
• Tuesday – Personal Income & Outlays Report
• Wednesday – Factory Orders, ADP Employment Report
• Thursday – Initial Jobless Claims, ISM Non-Manufacturing Index
• Friday – Unemployment Rate, Consumer Credit

As the Real Estate and financial markets continue to move up and down, mortgage rates can also be affected. Since mortgage rates are more closely tied to the bond markets, an up or down move in the stock market may not have the result in mortgage rates that one might expects. In fact, many times the resulting mortgage rate changes are counter-intuitive.

More importantly, rates change daily and they can change quickly. Some mortgage professionals have recently noted that their rate quotes have only had shelf lives of three to four hours before market changes have deemed them inaccurate.

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How does a consumer navigate fast changing markets in order to refinance their existing loan or purchase a home with the most favorable terms possible?

1. Plan – Define your needs ahead of time, do not wait until the last minute. This is especially true of home purchases.
2. Consult – Talk to your mortgage professional on a regular basis so they can interpret recent market events to you and communicate how those events can affect you.
3. Execute – When you have defined your needs and have determined that now is the best time to move forward, don’t shop yourself out of a good loan! What does this mean? It is easy to get caught up in shopping for the best rate, but it is not uncommon for home owners to miss locking their loan at a great rate because they are in search of better rates that do not exist or that they do not qualify for. It is important to shop to insure you are getting the best rate possible, but set limits to the number of companies you are going to consider doing business with and be careful of having your credit report needlessly and more times than is necessary!