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.
The economy appears to be heating up or this is just a holiday blip. The Producer Price Index and Retail Sales both came in double what was expected. For the economy, this is great news. For bonds, not so good news. Rates dropped on the news but has appeared to have been stopped by the 25 day moving average. Stocks are down on the news as well.
Tomorrow Consumer Price Index will be released. Since Producers normally pass on costs to the Consumer, I am expecting to see these numbers come in higher as well.
Technically speaking - the FNMA 6.0% 30 year bond is currently being support by the 25 day moving average today and is in the middle zone of over bought and over sold.
Therefore the recommendation for consumers is to
Lock (in yesterdays gains).
To learn why one should Float or Lock -
Check out Should I float? Should I lock? & Reasons to Float or Lock
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In a volatile market such as this, it's always better to lock ( a bird in the hand thing). That said, my personal crystal ball says that the retail sales figures were inflated due to a longer selling period this November over last November. December year over year sales are going to be flat, if not down..
The core inflation number (with energy and food stripped out of the equation) was only up a much more modest amount and this is the figure that the Fed supposedly looks at. Over -all the economy is looking rather weak to me. Bob predicts a recession!
Bob Mitchell
ValueList Real Estate Services, Inc.