July 30th Best Mortgage Rates and Lock Recommendation

Here is today's look at best mortgage rates, (which do not include discount points, origination points, or loan level risk based price adjustments) 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.

If the market was an ocean, investors would be puking over the sides of their boats by now. The motion is contstant---up, then down, then back up--and unpredictible. Mortgage backed securities (MBS) once again started out with gains in the early hours, only to be shut down unable to hold onto early morning gains.

There is very little good news for bonds--the stock market is steaming, unemployment claims came in as expected, and the Fed indicated in its reports yesterday (AKA the "beige book") claimed the economy is beginning to stabilize in several regions of the country. So of course the Treasury auction drew few takers and pushed rates up. Lenders worsened their prices, only to see a small MBS rebound at the end of the day and they hurried to bring back prices to where they began that morning. So unless you are one of those kids who likes riding escalators up and down all day, you're probably getting sick and tired of all the ups and downs.

There is some imported data that should be released tomorrow--the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP), one of the most reliable indicators of economic activity and can really push the financial markets. Analysts are guessing that the economy shrank 1.5% (annual rate) in the second quarter. A lesser drop could really hurt bond and MBS pricing, resulting in higher mortgage interest rates to you. The other factor is investors' reaction to tomorrow's Treasury auction. If the offerings bring only yawns and the GDP comes in higher than expected, rates could get ugly. Of course there is always a chance that data could come in showing economic weakness, the stock market could tank, and investors could go running back to bonds again. But that isn't a chance I'd be willing to take if I had a loan in escrow right now. Therefore:

I would LOCK my mortgage rate if closing within 60 days.. 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.