December 8th Best Mortgage Interest Rates and Lock Recommendation

By: Liz Freeman
December 9th, 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 WORSEN  *** Mortgage-backed securities (MBS)  gave back gains as stocks rallied. As this is not in response to any release of economic data, rates are merely being driven by stock market activity. Advise floating.

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.

I would FLOAT my rate in anticipation of rates moving down and MBS continuing to trade within their range. 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.