October 5th Best Mortgage Interest Rates and Lock Recommendation
By: Freeman Liz
October 05, 2009
| Program | Rate | |
| 30 Year FRM | 4.91% | Better by .02 |
| 15 Year FRM | 4.42% | Better by .03 |
| 5/1 Year ARM | 3.84% | Better by .02 |
| Jumbo 30 Year FRM | 5.80% | Better 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.
STOCKS RALLY, BONDS UP TOO. RECOMMEND LOCKING. Long-term Treasury prices have increased this morning as have mortgage-backed securities (MBS). This is good for mortgage interest rates. The government will be selling off a total of $78 billion in Treasury Inflation Protected Securities (TIPS) this week in four auctions. Today, on offer are $7 billion in 10-year TIPS.
This week's sales are the latest in a series of record-size debt sales that the U.S. has held every month to help manage the budget deficit and fund its economic stimulus package.
On Tuesday,�� $39 billion worth of 3-year notes are for sale,�� followed by $20 billion in�� 10-year notes Wednesday and $12 billion in�� 30-year bonds Thursday.
U.S. debt prices have held up well so far,�� though experts are concerned that demand could weaken as the government saturates the market. So Treasury prices can be volatile ahead of auctions. In the absence of important economic data this week, the outcome of those auctions and events in the stock market will be the primary drivers of MBS pricing and mortgage interest rates.
Rates are near the floor of their trading range now, making increases more likely than decreases. If closing in the next 60 days I would LOCK my rate this morning.�� 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.
