September 30th 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.

RATES HIGHER THIS MORNING FOR NO APPARENT REASON. Despite a weak stock market this morning, bonds and mortgage-backed securities (MBS) pricing was off, meaning an increase in rates over yesterday's. With little economic news and trading volume on the low side, I would expect loan pricing to improve .125% to .250% by the day's end.

Today's only semi-important economic reporting was the final revision to the 2nd Quarter Gross Domestic Product (GDP). It showed a 0.7% decline, which means that our economic decline is slowing--last month's GDP dropped by 1%. This would be bad news for mortgage rates except that 2nd quarter data is such old news it has little effect.

One manufacturing report gave up some interesting news--The Chicago Purchasing Managers Index fell to 46.1 in September, down from 50 in August and substantially less than the 52 expected by industry analysts.?? If this is part of a ntional trend it would be bad for the economy but good for MBS and mortgage rates.

In another intriguing report not on the national spotlight, employers cut 254,000 jobs from their payrolls in September, says giant payroll processing company ADP. This was greater than the 200,000 job loss economists had forecast. The ADP report might be a prelude to Friday's government jobs report--if government unemployment reports go the same way as the ADP findings, rates could improve rather dramatically--the bond markets love bad news.

Tomorrow brings two reports--August's Personal Income and Outlays and The Institute for Supply Management's (ISM) September manufacturing index. Analysts are expecting improvements for both of these, and if they don't get them, expect to see the bond market rally and mortgage rates fall tomorrow morning.

If closing in the next 7 days I would LOCK my rate this afternoon and take advantage of price improvements. Otherwise, I would FLOAT it. For gamblers and those closing at a later than 7 days, waiting until Friday may well pay off if employment and manufacturing data continue the trend set by the ADP and Chicago figures.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.