November 18th Best Mortgage Interest Rates and Lock Recommendation

By: Liz Freeman
November 18th, 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 INTEREST RATES AT SIX-MONTH LOWS. LOCK, LOCK, LOCK.  Today’s most important report, the Consumer Price Index (CPI), shows that inflation is still not something we need to concern ourselves with. Overall prices are still down .2% from last year.

In addition, the Commerce Department’s Housing Starts data showed that there are a lot fewer homes being started than expected–good for drying up the supply and good for mortgage rates, although worrisome for the building industry.  The report indicated housing starts plunged almost 11%–a yearly pace of only 529,000.  Housing permits were also considerably lower than expectations  at 552,000, after last month’s annual pace of 575,000.

Finally, the Mortgage Bankers’ Association released their weekly applications index. This data tracks  mortgage applications at major lenders, and an increasing trend is good for the economy.  First, more property purchases means more construction and consumer spending.  Second, more refinancing  drives higher consumer spending as homeowners find more disposable income.   The report shows that purchase applications have fallen again down 4.7% following last week’s plunge of 11.7%.  But what’s bad for the economy is good for interest rates–keeping inflation concerns at bay.

rates are at rock bottom, and they always move up a lot faster than they drop, so I recommend locking for most people. If closing in the next 60  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.