Mortgage Trends This Week: Feb. 1

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Here’s a fact that could ruin your Monday morning (unless you’re a banker).

Peter Morici, former chief economist at the U.S. International Trade Commission, points out that the U.S. gross domestic product increased by a weak $176 billion in the second half of 2009 (after adjusting for business inventory bookkeeping procedures). During the same period, Morici points out, U.S. banks paid out nearly $150 billion — and earned roughly twice that amount of money in profits.

As Morici says in a RealClearMarkets.com post, “It is easy to see who is benefiting from (President) Obama's growth policies, and why most Americans feel a bit poorer each day.”

Maybe that’s why so few financial pundits — and American families — made a big deal out of the news that the GDP grew by 5.7% in the last quarter of 2009. Discounting the inventory liquidation that took place during the quarter as panicked companies throttled down on inventories in the teeth of a big consumer recession, real GDP was closer to 2.2% for the quarter. In addition, business investment is off by 14.6% from a year ago at this time, and American workers are taking a huge hit in their paychecks. According to the U.S. Labor Department, wages and benefits rose by just 1.5% in 2009 — the lowest number ever recorded.

Clearly, the U.S. economy remains in a world of hurt, and that pain is reflected in the downward trend in mortgage rates last week.

Here are the numbers, as measured by the BankingMyWay Weekly Mortgage Rate Tracker:

Description            This Week        Last Week

One-Year ARM          3.95%                4.31%

Three-Year ARM        4.03%               4.46%

Five-Year ARM          4.18%               4.41%

15-Year Mortgage    4.5%                 4.57%

30-Year Mortgage    5.09%               5.15%

Under normal circumstances, you’d think that a 5.7% GDP number would be enough to kick start the economy and boost mortgage rates in the process. But these aren’t normal circumstances, and this isn’t a real GDP number — it’s more of a reflection that U.S. companies are once again battening down the hatches by reducing inventories, and getting ready for a second economic tsunami later this year.

That’s the growing sentiment among economists and financial gurus these days. According to Peter Schiff, author of the best-selling book Crash Proof: How to Profit From the Coming Economic Collapse, both Washington and Wall Street just don’t get it. “The President spoke optimistically about the future, but in reality there is little evidence to support such an upbeat outlook,” says Schiff. “He began his speech by assuring us that the worst of the storm had passed. General Custer may have said something similar when the first wave of Indian attacks ebbed at Little Big Horn.”

The silver lining, of course, is that mortgage rates continue to be at historic lows. To get the best mortgage rates deal possible, visit BankingMyWay’s Mortgage Rate Search. In troubled economic times, you won’t find rate deals lower anywhere else.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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