January 29th Best Mortgage Interest Rates and Lock Recommendation

By: Liz Freeman
January 29th, 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 UP SLIGHTLY BUT REPRICING FOR BETTER POSSIBLE***

Today’s release of  the 4th Quarter Gross Domestic Product (GDP) revealed a 5.7% annual rate of growth during the last quarter of 2009,  much better than expected and bad for mortgage rates as it fuels concerns about inflation. However, this was offset by a stalled stock market rally, and  a much lower than expected inflation reading–half of what was forecast, implying that inflation isn’t a concern yet.  In addition, the University of Michigan’s Index of Consumer Sentiment for January was revised upward to 74.4 , showing unexpectedly stronger consumer confidence, also potentially inflationary. Mortgage analysts expect a possible revisions to the higer interest rates posted this morning; if locking, you might want to wait for Monday morning.

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.