October 2nd 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.

JOB LOSSES CONTINUE, STOCKS SLIDE, MORTGAGE INTEREST RATES IMPROVE **LOCK THIS MORNING** Payrolls dropped dramatically in September and the unemployment rate hit another 26-year high. The Labor Department said there was a net loss of 263,000 jobs in the month--far more the 175,000 expected by analysts.Markets react when data defies expectations, and this morning the stock market is taking a sound beating--but that's good for mortgage-backed secutities (MBS), bonds,?? and interest rates.

This is only the second time this year that job losses increased from one month to the next--the job market seemed to be recovering slowly since losing 741,000 jobs in January. In the last 21 months, 7.2 million jobs have been lost.

Even though many economists believe that the economy is growing, today's jobs report shows that job losses could continue, putting the brakes on an economic turnaround. "This report is dismal and disappointing," said Sung Won Sohn, economics professor at Cal State University Channel Islands. U.S. stocks fell. The unemployment rate rose to 9.8% in September from 9.7% in August. That was in line with economists' forecasts, but it is now the highest since June 1983.

If closing in the next 30 days I would LOCK my rate this morning. MBS are already giving back some of this morning's gains so this afternoon may be too late. Otherwise, I would 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.