December 18th Best Mortgage Interest Rates and Lock Recommendation

By: Liz Freeman
December 18th, 2009  

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.

*** LOCK ALERT *** RATES UP, DRIVEN BY STOCKS ***

Rates today will be largely driven by movements in the equities markets, as there is no relevant financial data scheduled for release. Movements will have little bearing on long-term expectations: much of the trading will be the result of the expiration of options. Bond and mortgage-backed securities rates will have little direction, trading is expected to be thin, and changes may be abrupt and arbitrary.

Next week, we’ll get a couple of important economic reports, including housing sector activity, data on personal income and spending, and a high profile manufacturing report. There is nothing important being released on Monday, so expect the stock markets to continue to push bond trading and mortgage pricing.

If closing in the next 7 days, I would LOCK ; 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.