January 6th Best Mortgage Interest Rates and Lock Recommendation

By: Liz Freeman
January 6th, 2010  

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 WORSEN ON IMPROVED EMPLOYMENT DATA***

Mortgage-backed securities opened lower today in anticipation of Friday’s employment data. Two smaller reports gave what may be a preview of a rosier employment picture than anticipated.

Automatic Data Processing reported that private-sector employers dropped 84,000 positions in December, which was the fewest since March  of 08.  And outplacement firm Challenger, Gray, & Christmas reported that 45,094 job cuts took place in December,  the lowest  since December 2007.

Positive economic reports tend to send MBS prices lower as investors turn to equities and shun debt instruments.

If closing in the next 7 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.