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Should I Float? Should I Lock? - Daily Update for Friday, November 9, 2007

Here are the daily thoughts on floating or locking if you are asked by your clients.

As always - consult your favorite mortgage professional who will be able to offer the best advice for YOUR unique situation.

Good news for bonds today (Bad economic news). The trade deficit came in lower than expected by analysts due to Bernanke & Co (the Fed) lowering interest rates and weakening the dollar. Though this means that overseas imports are more expensive, the obverse is true as well. Overseas markets find our products cheaper, hence buying more U.S. products. Consumer sentiment was lower than expected which also helps out bonds.

Technically speaking - The FNMA 6.0% 30 year bond is still hovering in a range of neither overbought nor oversold. It also appears to be resting right on the 25 day moving average. With stocks appearing to take another hit due to negative news from Wachovia, the recommendation for the day is

Float.

Posted by Matthew Rosov, Certified Mortgage Planning Specialist on 11/09/2007 09:19 AM

Comments (3)

mortgage rates, rates, locking rates, floating

3 Comments on Should I Float? Should I Lock? - Daily Update for Friday, November 9, 2007

NOV

2007

Matt,

Is the Fed's last 0.25% lowering finally reflected in mortgage lending rates yet?

I haven't checked yet.

Cheers, Mr. C. KIM McGuire. N. Padre Island, TX

Mr. McGuire - the only rates that actually affected by the Fed lowering the Prime would be HELOC's and similiar adjustable mortgages that use the Prime as an index. For the majority of loans - 30 year fixed, FNMA, GNMA, FHA, VA, etc - the prime lending rate affects them in various indirect ways. Mortgage backed securities are what affect these rates the most and those securities move according to how bond traders react to various news items and what the stock market is doing.

In essence - the indirect effects of the Fed's 1/4 point cut have already been taken into account on mortgage rates.

Thanks Matt for the answer.

Winter is coming. Brrr. Slow season for real estate.

Cheers, Mr. C. KIM McGuire. N. Padre Island, TX

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