California Mortgage Rate Update for the Week of 08/20/12

Mortgage and Lending with Guaranteed Rate, Marin County, CA NMLS: 22343
RPM Mortgage in California
California Mortgage Rate Update for the Week of 08/20/12
Contrary to popular belief, my recent absence has not been due to the changing state of interest rates.  And no, I was not cowering under a rock the whole time.  But since I've already missed one day this week, let's jump right into the action.  Monday and thus far Tuesday have been relatively benign market days and the stock and bond markets have been adrift in the dog days --- not really making big moves to the up or down side.  However, after a tough week last week on the interest rate front, we of course begin this week with mortgage rates higher and some folks scratching their heads about things ever getting as low as they were before.  I do have an opinion on this, but true to Pat Moynihan, I am not entitled to my own facts, so let's instead start with those:
Economic highlights for the week: FOMC minutes are due out today (Tuesday).   Along with July's existing and new home sales reports on Wednesday and Thursday, respectively, these are our highlights.  As for the FOMC minutes, I think more eyes are on their September meeting and right now, there's a fairly even split about whether or not we'll see more quantitative easing from the Fed (QE3).  As we have learned all along, market direction with any QE is hard to predict, but we are certain that the attitude about whether or not more stimulus is needed can change quickly.  Right now, the QE3 play seems off the table and there is a relative ease and calm with the situation in Europe.  These prevailing thoughts have weakened the US bond market, resulting in our higher mortgage rates.  Of course, the situation in Europe has not fundamentally changed, but none of our indicators this week will shed any light on that.  Net-net, likely a quiet week in terms of news and market moving data.
Lock advice: If your time frame affords the luxury, I would take a FLOAT position.  It is hard to do this when you feel you've lost something you might have had.  But again, time permitting, the odds are in your favor that you will get it back.  These diversions from the lower rate trend can last a while, and I am reminded of the investor saying, "Markets can remain irrational longer than you can remain solvent."  So if you feel you must lock, go ahead and do it.  We're talking .25% to .375% higher than your probable best rate from a few weeks ago, so you haven't lost much.  Ten years from now, you will not remember that you could have locked 3.5% on a 30-year fixed and "only" got 3.75%.  You will instead be happy your mortgage rate is 2 to 3 points less than what your savings account is paying you in interest.... 
For specific pricing on your scenario, or to get pre-approved without obligation for any loan product, you can:

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Robert J. Spinosa

Home Loan Professional
DRE: 01297944 NMLS: 22343

1058 Redwood Highway

Mill Valley, CA 94941

877.270.5959 Toll Free
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Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Rob, I have been concerned that the rates would start spiking. I am glad to know you think that floating might be a good thing.

Aug 21, 2012 11:32 AM #1
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hi Rob -- I really like the way you deliver the mortgage news -- smart, well-written and above all, useful 

Aug 21, 2012 01:21 PM #2
Rob Spinosa
Guaranteed Rate, Marin County, CA - San Anselmo, CA
Vice President of Mortgage Lending, Marin County

Thanks for the great comments, guys.  I really appreciate the support.  And yes, we'll see rates tick lower again before the Fat Lady sings.   It's just about now that all the market experts come out and say, "See! I told you!  Rates are not going back down, and this was it, etc., etc."  And each time, they've been wrong.

Aug 21, 2012 11:05 PM #3
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Rob Spinosa

Vice President of Mortgage Lending, Marin County
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