November 23rd 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.

RATES DOWN TO SIX MONTH LOWS. NO REASON TO FLOAT. With rates in bargain-basement territory, a lot of economic data ahead, and a week shortened by Thanksgiving, borrowers have every reason to lock and very little to gain by floating.

Today, the national Association of Realtors released their Existing Home Sales data, which summarizes sales of homes  that were not newly-constructed. These figures were much higher than expected in October, and can be extrapolated to show an annual sales rate of 6.10 million, the highest in over two years.     The combination of low home prices,  government stimulus, and rock-bottom mortgage rates seem to be driving a possible housing recovery.   Many economists believe the economy will not recover until housing does, so this is important. And as always, positive news for the economy has the effect of raising concerns about inflation and can push mortgage interest rates up.

Today, the U.S Treasury will auction $44 billion in 2-year notes.   Investors look at the demand for this issue to gauge the potential for inflation in the near term–weak demand bodes poorly for mortgage interest rates.  Strong demand has helped keep mortgage rates near historic lows so far.  Tomorrow the Treasury will auction $42 billion in 5-year notes,  and $32 billion in 7-year notes will be sold on Wednesday.

Finally, the revised Gross Domestic Product(GDP) for the third quarter when the revised reading will be released tomorrow, and the all-important Consumer Confidence report comes out as well.  Wednesday brings a slew of indicators, including Personal Income and Outlays, Durable Goods Orders,  Jobless Claims, Consumer Sentiment, and New Home sales. Expect lenders to price conservatively before the long weekend to avoid “tape bombs,” or economic events that could increase rates while the lenders are closed.

If closing within 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.