Mortgage Rate Forecast: February 2009

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.

Mortgage Backed Securities (MBSs) continued their volatile trading today. Treasuries are up substantially on the day while stocks are down on concerns that the recession is deepening, and that the government will require banks to comply with stricter bailout conditions. After the release of several economic reports, the FNMA 30-Year 4.5% coupon was up only 2/32, but is now down 5/32 in late afternoon trading as the selling off continues. There is a potential for mortgage rate repricing for the worse before the close of business today.

MBS traders will focus on the employment numbers on Friday. They are looking for evidence the recession is deepening while at the same time digest the expected record amount of debt needed to finance the myriad of anticipated government spending. On Wednesday, we get the Challenger & ADP job reports. This will provide a glimpse at the employment and layoff situation. The jobless claims report comes out on Thursday, while the Employment report for January comes out on Friday.

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.

Mortgage Backed Securities (MBSs) continue their volatile trading today after being up 11/32 at the opening bell. After the release of several economic reports, the  FNMA 30-Year 4.5% coupon was up only 2/32. Treasuries are up substantially while stocks are down on concerns that the recession is deepening & the government will require banks to comply with stricter bailout conditions.

MBS traders will focus on the employment numbers on Friday. They are looking for evidence the recession is deepening while at the same time digest the expected record amount of debt needed to finance the myriad of anticipated government spending. On Wednesday, we get the Challenger & ADP job reports. This will provide a glimpse at the employment and layoff situation. The jobless claims report comes out on Thursday, while the Employment report for January comes out on Friday.

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.