September 22 Best Mortgage Interest 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.

REPRICING FOR WORSE LIKELY TODAY. Mortgage-backed securities (MBS) prices have dropped in morning trading as stocks rallied and lenders may not be able to absorb the hit. In the absense of major economic news, rates are dependent on stock market movements today's Treasuty auction results. In addition rising gold and oil prices are putting inflationary pressure on bonds and MBS and today's rates reflect that.

This morning, the Federal Housing Finance Agency(FHFA) released their monthly House Price Index which tracks the monthly change in home prices. Home prices appear to be holding their ground, increasing by .3% last month--the third month of increases in a row, which makes the idea of a pending economic recovery seem a bit more realistic.

This afternoon, the U.S. Department of Treasury will auction off $43 billion of 2-year notes. Robust demand for these has kept fixed income yields and mortgage rates low so far. However, this week in Japan is a holiday, so there may be fewer investors. Today's is the first of three auctions that will be held this week with $40 billion of 5 year notes tomorrow and $27 billion of 7 year notes on Thursday. Rates may move sharply at the conclusion of the auction depending on its results.

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.