December 7th Best Mortgage Interest Rates and Lock Recommendation

By: Liz Freeman
November 30th, 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.

*** LOCK ALERT *** RATES IMPROVE SLIGHTLY (FINALLY)  *** Mortgage interest rates drop as investors in stocks take their profits and run. Rates stopped a 5-day losing streak and finally recovered somewhat today. LOCK if closing very soon; the latter part of the week could prove volatile.

Monday’s bond and mortgage-backed securities (MBS)  markets opened up this morning, recovering part of Friday’s sell-off. The MBS improvements should translate to a .250% mortgage interest rate  improvement  from Friday’s morning rates.

There is no important economic news scheduled for release today, tomorrow, or Wednesday. October’s Goods and Services Trade Balance report posts early Thursday morning. This report gives the size of the U.S. trade deficit, but it is the week’s least important release. It is expected to show a $37.0 billion trade deficit. Unless it varies greatly from forecasts, don’t expect it to a influence mortgage pricing.

A volatile second half of the week could create a little havoc in the MBS markets, with the biggest changes in mortgage pricing likely to come Wednesday or Friday. Friday’s Retail Sales report can really push rates, but Wednesday’s Treasury auction may also help determine if rates will close the week higher or lower than tomorrow’s opening levels. It will also be interesting to see if bonds extend Friday’s selling into tomorrow’s trading or if they recover some of those losses. This week,  maintaining contact with your mortgage loan officer is probably a good idea.

If closing in the next 7  days I would LOCK my rate, otherwise I would FLOAT it. 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.