October 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.

MORTGAGE RATES CORRECT, BOUNCE BACK INTO TRADING RANGE TODAY. Today's mortgage-backed securities (MBS)?? market has opened up after this morning's economic data failed to bring any surprises and stock markets opened with a whimper.?? Equities are not looking good today; the Dow has returned over half of yesterday's surge with a loss exceeding 100 points so far. Bonds are up 11/32, but it is doubtful that rates will change today in front of the weekend.

Today's release of the 3rd Quarter Employment Cost Index (ECI) showed an increase of 0.4%, which matched forecasts and so its imjpact on trading was minimal. This means that employer costs for wages and benefits rose moderately during the third quarter, but this was expected.?? September's Personal Income and Outlays report?? revealed no change in personal income last month and a 0.5% decline in spending--again, in line with expectations so no change in interest rates. The?? University of Michigan's update to their Index of Consumer Sentiment for October came in at 70.6 and barely exceeded forecasts of 70.0.?? So consumers were a little more optimistic about their financial situations than many had thought. It's bad news for MBS but?? is only moderately important, and didn't differ much from expectations, so rates have not increased from yesterday's low final figures.

Yesterday's 7-year Note auction was met with an average demand. It can't be considered weak or strong. Some of the components that measure the success of the sales pointed towards less interest than Wednesday's auction, but not by enough to cause much concern.

Rates opened at the low end of their trading range, a good sign for those looking to lock in. 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.