GDP comes in stronger than expected; until you actually read the report
This morning the advance GDP for the first quarter was released showing 3.2% growth, much higher than expectations of 2.1%. That is the headline. It initially caused mortgage rates to move up this morning. However, that quickly reversed and are rates are now improving as markets take a deeper dive into this report. First, when you take out food and energy the core GDP actually missed expectations coming in at 1.3%; as a comparison GDP last quarter was 2.0%. Inflation dropped from last quarter as well sliding from 1.7% to 0.9%
Some of the growth reflected in the report is due to a build-up in inventories; stockpile ahead of tariffs? It is still unknown, but since consumer spending dropped by half of spending from the last quarter, that is a reasonable conclusion.
All this is good news for mortgage rates. Over the past couple weeks rates ticked up slightly but today showing improvement. We will have to watch and see if this will have any material effect on mortgage rates over the near term since this is just the advance GDP it is subject to revisions.
* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.