Mortgage rates improved moderately to begin the week, bringing most lenders back to levels not seen since January 2nd or before. Following the Fiscal Cliff "mini-deal," FOMC Minutes, and Employment Report two weeks ago, rates rose at to their highest levels since before the Fed announced its most recent buying program for MBS (the "mortgage-backed securities" that most directly influence rates) in mid-September.
While borrowers who have been considering locking their loan in mid-December, but decided to wait for the new year aren't quite back to levels that would constitute a major victory, if we factor in the decreased cost of a shorter lock time, we're getting closer. Those who were considering locking but held off as markets worsened on the first week of the year, have now recouped their losses. As always, the bigger questions pertain to predicting the future--as in: will rates continue to improve from here, or was this merely a period of consolidation before another move higher?
Of course, there's no way to know for sure. If you're inclined to hold out for additional improvements, it makes sense to set your own personal line in the sand, beyond which you'll lock, even if the terms are worse than today's. We should have a clearer picture as to whether we're continuing lower or pausing/bouncing at current levels by tomorrow morning.
Ongoing Lock/Float Considerations
- Rates have risen moderately from their all-time lows, making for relatively increased reward for floating at the expense of greater risks of loss.
- Rates could easily move higher or lower, and unscheduled, unexpected events can ultimately have the most say in the direction.
- Near term risks in 2013 include the upcoming debt-ceiling debate in Washington as well as the Fed's policy outlook regarding securities purchases.
For further information or to run your particular scenario please feel free to call me anytime at 480-705-0199
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