September 21st Best Mortgage Interest Rates and Lock Recommendation
By: Freeman Liz
September 21, 2009
| Program | Rate | |
| 30 Year FRM | 5.01% | Worse by .03% |
| 15 Year FRM | 4.55% | Worse by .03% |
| 5/1 Year ARM | 3.96% | Worse by .04% |
| Jumbo 30 Year FRM | 5.86% | Worse by .02% |
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.
This morning, The Conference Board said that its Leading Economic Indicators for August increased 0.6%. This means expect moderate- to-rapid growth in economic activity. This would seem to be inflationary and bad for mortgage-backed securities (MBS), except that The Conference Board's reading indicates less growth than many analysts have predicted. So it's actually good news for bonds and MBS. Rates improved slightly this morning before backing back down in advance of tomorrow's first Treasury auction. So little has changed compared to Friday afternoon and they are still well within their recent trading range. Nothing has yet broken the trend.
More important reports are due later this week, however. Tomorrow begins the federal Open market Committee (FOMC) meeting and it adjourns Wednesday afternoon. It is doubtful that the Fed will make any rate changes; however, any statements released always have the potential for shaking up markets.
Wednesday, the first of this week's two important Treasury sales will take place (5-year notes), and 7-year notes will be sold on Thursday. If investor demand in these sales is strong, bond and MBS markets should move higher and push mortgage rates lower. But a lack of interest interest from investors could lead to bond selling and higher mortgage pricing. The results of each sale will be announced at 1:00 PM ET each day, so any reaction to the results will come during afternoon trading Wednesday and Thursday.
If closing in the next 30 days I would LOCK my rate now. Otherwise, I would FLOAT it. 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.
