November 16th Best Mortgage Interest Rates and Lock Recommendation

By: Liz Freeman
November 16th, 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.

MORTGAGE RATES STILL LOW. ADVISE LOCKING ASAP. Mortgage-backed securities (MBS) are still trading near the top of their range, meaning that mortgage interest rates are holding near the bottom of theirs. Mortgage rates move inversely to MBS and bond pricing. We are only about .125% higher than the lowest mortgage rates in history; there is little room for improvement and so I recommend locking your mortgage interest rate.

This week started  with the Retail Sales report. This is an important report because about two-thirds of our economy is driven by consumer spending.  The U.S. Department of Commerce reported that retail sales were low–not good but better than expected, so that would be bad for bonds and mortgage interest rates.

At noon EST, Federal Reserve Chairman Ben Bernanke will speak, and investors will pay attention. His words can influence markets if he gives any ideas as to what his future monetary policy might be.

Tomorrow, we get the Producer Price Index (PPI), which quantifies inflation on the producer level. Industrial Production data will  be released as well.  Wednesday, the Consumer Price Index (CPI), which quantifies inflation on the consumer level, will be released, along with Housing Starts.   Thursday brings the weekly jobless claims report, which is less important because only one week’s data is reported.   On Thursday we also get the announcement from the Treasury Department on the size of next week’s auction cycle of 2 year, 5 year, and 7 year notes.

If closing in the next 45  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.