October 23rd 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.

CONSUMERS RACING TO BEAT DEADLINE FOR MORTGAGE CREDIT, MORTGAGE RATES INCREASE. The National Association of Realtors (NAR) reported that existing home (as opposed to newly-constructed) home sales for September were much higher than analysts expected, increasing by 9.4% --an annualized pace of 5.57 million sales.�� It looks like many first-timers are rushing to make the deadline and get their First Time Home Buyer tax credits.���� And there was more good news for the economy--the inventory of existing homes dropped to a 7.8 month supply, the lowest since March of 2007.

As we know, good news for the economy doesn't usually translate to good news for mortgage-backed securities (MBS). In fact, the opposite response is more likely, and that's what's happened today. MBS pricing drops as investors turn instead to the stock markets, and interest rates rise as a result.�� Expect to pay about .125% more for your loan today than yesterday, and things are unlikely to improve going into a weekend.

The case for locking in your rate ris strong, especially if your mortgage approval depends on keeping the rate low. If closing in the next 60 days I would LOCK my rate. 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.