June 29th Best Rates / Lock Recommendation

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Program Rate
30 Year FRM 5.011% Worse by .02%
15 Year FRM 4.54% Worse by .03%
5/1 Year ARM 3.90% Worse by .04%
Jumbo 30 Year FRM 5.41% Worse by .07%

Here is today's look at best mortgage rates (which may require points), provided by Mortgage News Daily, Freddie Mac, and other sources. Note that Freddie Mac's AVERAGE rates are typically higher than BEST rates, because average rates include surcharges for risks associated with property types, down payments, and credit scores. To be eligible for BEST rates, borrowers need spotless credit (740 score or better), a sizable down payment (20-25%) or equity amount, and stable, adequate, and documentable income. In addition, the property must be located in a healthy (not declining) market and must be conventionally built.

Mortgage-backed securities (MBS) markets opened unbelievably strongly last Friday, effectively lowering rates by about .25%. If you jumped on that and locked, congratulations. Today's investors seemed to look more closely at last weeks optimistic economic data (bad for MBS and interest rates) and today they moved toward equities, with MBS giving back nearly all their gains from Friday this morning.

MBS will be driven by treasuries , confidence, and equities once again. And the Dow is up, the benchmark 10 year Treasury note is trading at a yield of 3.48, a (so far .03% improvement over last week's Friday close. If the yields continue to drop, MBS prices should increase which will allow lenders to pass along better rates.

This week is likely to be squirelly for the equities, bonds, and mortgage rates--with no major data release today and the markets closed Friday. But in between are several reports of varying importance--Tuesday's Consumer Confidence and S and P Home Price Index, Wednesday's Mortgage Bankers' Index, and Thursday's report--the Big Kahuna monthly Employment report from the US Dept of Labor. Any of these could shove rates hard despite favorable trands in treasuries right now. And I don't hang out in casinos. Therefore:

I would LOCK my rate if closing within 15 days; otherwise I would FLOAT my mortgage rate. This is only an opinion--what I would do if I were closing a mortgage at this time. Your decision may depend on other factors such as the strength of your loan approval and your tolerance for risk, and must be made with those in mind.

Liz Freeman has more than a decade of mortgage lending experience. She writes about mortgage and finance issues and is a regular contributor to Mortgage News Daily.
Posted in mortgage-commentary

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