November 17th Best Mortgage Interest Rates and Lock Recommendation

By: Liz Freeman
November 17th, 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.

PRODUCER PRICES LOWER THAN EXPECTED, RATES NEAR ALL-TIME LOWS. ADVISE LOCKING. This important report indicates that inflation is not yet a concern. Normally, if costs to the producers of goods rise, they are forced to pass them on to consumers, fueling inflation at the consumer level. Analysts expected prices to increase by .6%, but they were only half right–prices increased by .3% and when volatile food and energy were excluded, prices actually dropped like rocks–a huge .6%!

The Industrial Production report also hit our desks this morning, indicating how much factories, mines, and utilities are producing.   Increases indicate economic improvement, as busier factories mean  more jobs and more demand for goods.  The bond and mortgage-backed securities (MBS) markets usually do better when production is down and stocks do better when production is up.  Economists surveyed expected a 0.4% month-over-month gain for October, but the report showed that  industrial production only rose 0.1% last month–excellent for MBS but less so for the economic recovery.

Tomorrow, 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.

Data indicates that rates could go a bit lower, but history shows that there is little room for improvement and a lot of room for rate increases. 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.