August 18 Best Mortgage Interest Rates and Lock Recommendation
By: Freeman Liz
August 18, 2009
| Program | Rate | |
| 30 Year FRM | 5.13% | Worse by .02% |
| 15 Year FRM | 4.32% | Worse by .02% |
| 5/1 Year ARM | 3.83% | Worse by .03% |
| Jumbo 30 Year FRM | 5.64% | Worse by .03% |
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.
The stock market recovered some this morning, and mortgage-backed securities (MBS) and bonds gave back some of their gains from yesterday, likely based on reports that inflation is unlikely to be a problem for some time. Of course, the downside of that is the consumers keeping a tight hold on their wallets doesn't help the economy and it's fragile enough as it is.
Today's Producer Price Index (PPI), which indicates if inflation is hitting the production part of the economy, showed that inflation declined sharply (>.9%) and is not a worry at this level. The decrease exceeded expectations, and a report on housing starts which showed that as of July they are down nearly annualized 38%--which should have sent stocks packing and bond yields down. But that hasn't happened--stocks are up just a bit, MBS are down-- and the effects have been rather small. Nothing much else expected this week, probably a few small bumps and dips as equities and MBS trade for the top spot in investors' confidence...
I would LOCK my mortgage rate if closing within 15 days; otherwise I'd FLOAT my 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.
