December 29th Best Mortgage Interest Rates and Lock Recommendation

By: Liz Freeman
December 29th, 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 HOLDING IN ADVANCE OF TREASURY AUCTIONS ***

Tuesday’s bond and MBS markets opened slightly up following mixed trading in stocks and no surprises in this week’s only significant economic news.  Expect this morning’s mortgage rates to improve by approximately .125 of a discount point.

The Conference Board posted their Consumer Confidence Index (CCI) for December late this morning, showing a reading of 52.9, almost  exactly as forecast.  Today, the  first of two important Treasury auctions will be held.  5-year Treasury Notes will be auctioned and 7-year Notes will be auctioned tomorrow. Yesterday’s 2-year note sale was a bit weak, which raises concern that the other two sales may be as well, dropping bond prices and increasing rates. Good results in the sales should increase bond prices and mortgage rates would move lower. Results of each auction will be posted at 1:00 PM ET each day, so the potential for afternoon revisions to rates is fairly high today and tomorrow.

If closing in the next 60 days, 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.