January 25th 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.

LOCK ALERT *** RATES INCREASE SLIGHTLY***

Today's bond and mortgage-backed securities markets opened down slightly even though the housing report was much worse than expected--the National Association of Realtors reported that home resales fell a humongous 16.7% last month.The surprising drop indicates that the housing sector is unstable, good for bond market and mortgage rates. However, the stock markets are posting minor gains and bonds are currently down;?? we will?? likely get an increase in this morning's mortgage rates of approximately .125 - .250 of a discount point.

The rest of the week will bring a lot economic data and it should be an active week for mortgage rates. There are six more important economic reports scheduled, plus treasury auctions and a Federal Open Market Committee (FOMC) meeting.

January's Consumer Confidence Index (CCI) hits?? tomorrow morning. This report is considered to be of high importance and can really push mortgage rates.?? A reading smaller than the expected 53.5 would be ideal for the bond market and mortgage rates.

In addition, the Fed will auction 5-year and 7-year Treasury Notes Wednesday and Thursday. If there is strong demand from investors, the broader bond market may rally during afternoon hours those days. However, poor performance could lead to a bond selloff?? and higher mortgage rates.

Expect tomorrow and Friday to be the biggest days for mortgage rate change. Friday's GDP is the most important report. If there are weaker than expected results, mortgage rates could go much lower. If the data is stronger than expected, mortgage rates should move higher--assuming that the Fed meeting doesn't bring any surprises. Stay in contact with your mortgage professional this week if still floating an interest rate.

If closing in the next 30 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.