Mortgage rate lock recommendation: February 28, 2012

Posted by  on Feb 28, 2012

Today's mortgage rates for fixed-rate 30-year mortgages remain unchanged since yesterday, according to HSH.com, maybe in response to the good news/bad news on housing.

On the good-news side, the National Association of Realtors announced on that the Pending Home Sales Index rose by 2 percent in January compared to December 2011, double what analysts had anticipated. Pending home sales were 8 percent higher than the pending home sales report for January 2011. Pending home sales are a forward-looking indicator based on signed contracts for home purchases.

The bad news: The Standard & Poor's/Case-Shiller home-price index shows that prices fell in December 2011 in 18 of 20 cities compared to November 2011. Prices fell in 19 of 20 cities when comparing December 2011 to December 2010. While home prices vary by location, values have dropped by 34 percent nationwide since the housing bust, back to the level of home prices in 2002.

This mixed bag of housing news may not have much of an impact on already low mortgage rates. A more critical indicator will come tomorrow with the release of new data on gross domestic product.

If closing in the next 30 days, I would LOCK my rate. Otherwise, I'd 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.


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