Mortgage Rate Forecast: January 2009

Mortgage Backed Securities (MBSs) continues their volatile trading trading today after spiking up 11/32 at the opening bell. The 30-Year FNMA 4.5% coupon is currently trending downward and is now trading below the yesterday's close. Mortgage rates may get worse in price before the close of business today.

Meanwhile, the Obama administration may be considering shelving its plan to create a "bad bank" to purchase "toxic mortgages" from banks. The problem lies trying to place a value on those assets so as not to hurt banks while at the same time not bail them out. An announcement for a "bad bank" plan was scheduled for early next week. Now the Obama administration is considering an insurance or guarantee program, and a plan won't be announced for at least another week or so. For more details, watch this video at http://www.cnbc.com/id/15840232?video=1018074662.

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	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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My Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Lock if my closing was taking place within 7 days
• Float if my closing was taking place within 8 and 30 days
• Float if my closing was taking place between 31 and 60 days
• Float if my closing was taking place over 60 days from now

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Interest rates are based on numerous economic, financial and credit based factors that adjust daily. In addition, lenders can vary on the qualification requirements from mortgage program to mortgage program. If you like the rate today, then the safe bet is to lock in. Even if rates improve, most likely they won't improve enough in the short term to make you cry about it. But if you are an ardent market bear and believe that we'll keep hearing more bad economic for a while, and you have the money to risk, then you may benefit from floating. Just remember, it always seems more painful to have not locked when you should have as opposed to locking in now and watching rates get a little better.

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	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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Prices of stocks, bonds and Mortgage Backed Securities (MBSs) are lower this morning after the House passed the $819 billion "stimulus bill" late yesterday. A bill to allow judges to "cram down" mortgage debt in bankruptcy proceedings also passed a House committee yesterday.

The 30-Year FNMA 4.5% coupon is now down 15/32 due to the massive supply of government debt.

Remember, on MBS, as the price goes up, the yield goes down - and mortgage interest rates go down with it. Conversely, as the price goes down, the yield goes up - and so do mortgage interest rates. Expect mortgage rates to get worse this afternoon.

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	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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My Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Lock if my closing was taking place within 7 days
• Float if my closing was taking place within 8 and 20 days
• Float if my closing was taking place between 21 and 60 days
• Float if my closing was taking place over 60 days from now

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Interest rates are based on numerous economic, financial and credit based factors that adjust daily. In addition, lenders can vary on the qualification requirements from mortgage program to mortgage program. If you like the rate today, then the safe bet is to lock in. Even if rates improve, most likely they won't improve enough in the short term to make you cry about it. But if you are an ardent market bear and believe that we'll keep hearing more bad economic for a while, and you have the money to risk, then you may benefit from floating. Just remember, it always seems more painful to have not locked when you should have as opposed to locking in now and watching rates get a little better.

---

	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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Prices of Mortgage Backed Securities (MBSs) opened up in this morning trading, but reversed course by late morning and headed down. The FNMA 30 Year Mortgage Backed Securities February 4.5 coupon is currently down 14/32.

Remember, on MBS, as the price goes up, the yield goes down - and mortgage interest rates go down with it. Conversely, as the price goes down, the yield goes up - and so do mortgage interest rates. Expect mortgage rates to go up this afternoon.

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	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

---

 

My Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Lock if my closing was taking place within 7 days
• Float if my closing was taking place within 8 and 20 days
• Float if my closing was taking place between 21 and 60 days
• Float if my closing was taking place over 60 days from now

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Interest rates are based on numerous economic, financial and credit based factors that adjust daily. In addition, lenders can vary on the qualification requirements from mortgage program to mortgage program. If you like the rate today, then the safe bet is to lock in. Even if rates improve, most likely they won't improve enough in the short term to make you cry about it. But if you are an ardent market bear and believe that we'll keep hearing more bad economic for a while, and you have the money to risk, then you may benefit from floating. Just remember, it always seems more painful to have not locked when you should have as opposed to locking in now and watching rates get a little better.

---

	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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Prices of Mortgage Backed Securities (MBSs) opened at the same level as yesterday's close. MBS moved into positive territory this afternoon after Republicans had a meeting with President Obama.

The Feds begin their two-day Federal Open Market Committee (FOMC) meeting today to determine what steps they should now take in monetary policy. The Feds will be determining their next moves to get the economy out of the recession and to grow again.

In a meeting with House Republicans, President Obama indicated that he wants a bipartisan effort to pass a stimulus package to create more jobs. Obama also indicated a plan must be put in place for the Feds to buy up toxic mortgages from the banks.

On the news, the 30-Year FNMA 4.5% MBS coupon prices moved higher, and is now up 9/32 from yesterday's close. Remember, on MBS, as the price goes up, the yield goes down - and mortgage interest rates go down with it. Conversely, as the price goes down, the yield goes up - and so do mortgage interest rates. I expect mortgage rates may improve this afternoon.

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	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

---

 

My Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Lock if my closing was taking place within 7 days
• Float if my closing was taking place within 8 and 20 days
• Float if my closing was taking place between 21 and 60 days
• Float if my closing was taking place over 60 days from now

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Interest rates are based on numerous economic, financial and credit based factors that adjust daily. In addition, lenders can vary on the qualification requirements from mortgage program to mortgage program. If you like the rate today, then the safe bet is to lock in. Even if rates improve, most likely they won't improve enough in the short term to make you cry about it. But if you are an ardent market bear and believe that we'll keep hearing more bad economic for a while, and you have the money to risk, then you may benefit from floating. Just remember, it always seems more painful to have not locked when you should have as opposed to locking in now and watching rates get a little better.

---

	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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Prices of Mortgage Backed Securities (MBSs) dropped a bit this morning as supply concerns weighed on fixed income securities. The FNMA 30-Year 4.5% coupon was down 4/32 as the Feds prepare to sell $78 billion in notes this week. MBS is currently down just 2/32 for the day. All in all, a fairly quiet day.

Fed policy makers are attempting to reduce long term borrowing costs while short term rates are effectively zero. Bond yields indicate that the central bank's efforts to restore trading in the credit markets are losing traction.

Existing home sales in December rose from a record low propelled by a large slump in housing prices as foreclosures surged. The inventory of unsold homes fell to 9.3 months from 11.2. That means if no more homes came on the market, it will take 9.3 months to sell all the homes that are currently on the market. The median price of an existing home decreased the most on record.

This week is full of economic reports which could impact the MBS market and hopefully bring us out of this tight downward trending trading range we've been in for the past week and a half.

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	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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My Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Lock if my closing was taking place within 7 days
• Float if my closing was taking place within 8 and 20 days
• Float if my closing was taking place between 21 and 60 days
• Float if my closing was taking place over 60 days from now

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Interest rates are based on numerous economic, financial and credit based factors that adjust daily. In addition, lenders can vary on qualification criteria from program to program. If you like the rate today, the safe bet is to lock. Even if rates improve, they wouldn't improve enough in the short term to make you cry about it. But if you are an ardent market bear, and accept the risk of negative mortgage headlines, and believe the economy will just get more bad news next week, and you have the money to risk, you may benefit from floating. Just remember, it always seems more painful to have not locked when you should have as opposed to locking and then watching rates get a little better.

---

	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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