September 25th 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.

Lots of economic data today but little effect on mortgage interest rates.�� Mortgage-backed securities (MBS) are relatively unchanged this morning in the wake of a successful Treasury auction yesterday. Part of this is the "Friday effect" and is the result of lenders' caution going into a weekend. They prefer to price less aggressively to offset the risk of weekend events, or "tape bombs" affecting the price of money after customers have locked on Friday but before lenders can nail down the funds.

This morning,�� stock markets are experiencing small losses, and the bond market is up slightly, which will likely improve this morning's mortgage rates a bit, possibly taking .125% off the pricing. Bonds are still coasting after yesterday's�� 7-year Note sale went rather well.

There were three reports released today. Results of two of them are bad for MBS and mortgage rates while one is good.�� But because the most important one indicated economic weakness (good for mortgage rates) the other two were pretty much offset and mortgage rate increases avoided thus far. The big one was the Commerce Department's August's Durable Goods Orders. It reported a 2.4% decline in new orders for big-ticket items at U.S. manufacturers. This was way off analysts' forecasts of a 0.5% increase and indicates that the manufacturing sector is weaker than expected, good news for bonds and mortgage rates.

Then there is the University of Michigan's revised Index of Consumer Sentiment for September. The�� 73.5 figure was much higher than the early reading earlier this month and recent forecasts.�� With consumers more optimistic�� than many had expected, this is considered bad news for�� and bonds because it indicates�� economic growth which is inflationary.

Finally, there is August's New Home Sales. Newly constructed home sales were up last month, but not as much as analysts expected. The increase in sales indicates housing sector growth but the fact that it fell short of expectations is actually positive for MBS--another offset.

If closing in the next 60 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.