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Rates improved slightly, about .125 on some products, others stayed the same after yesterdays cut of .5 on the prime rate. I will continue to watch the market and post current rates if we see any movement in either direction. Those of you in a second mortgage, interest only, not fixed like a heloc will see an improvement on your rate with the prime rate being cut. First mortgages are regulated by the bond market. When the bond market is up, mortgage rates go down. Today 5.375% on a loan under $417,000 would have a 1% origination fee, 5.5% would not have an origination fee.

Yesterday's preliminary reading of the 4th Quarter Gross Domestic Product (GDP) revealed an annual growth rate of 0.6%. That was half what analysts were expecting to see and indicates that the economy was in much worse shape than many had thought during the last three months of last year. This is good news for the bond market and mortgage rates as it eases inflation concerns that hurt long-term securities such as mortgage related bonds.

The 4th Quarter Employment Cost Index (ECI) is scheduled for release early this morning. It measures employer costs for employee wages and benefits, giving us an indication of the threat of wage inflation. It usually has more of an effect on the bond market than the stock markets. Current forecasts are showing an increase of 0.8%. A lower than expected reading would be favorable to bonds and mortgage rates. 

Today is the release of January's Personal Income and Outlays report. This data gives us an indication of consumer ability to spend and current spending habits. Current forecasts call for an increase in income of 0.4% while spending is expected to rise 0.1%. Larger increases would be good news for the stock markets and could hurt bond prices, driving mortgage rates higher. Smaller than expected increases should help push mortgage rates slightly lower, assuming the ECI doesn't give us a negative surprise.