Conforming Mortgage Rates Improving
Some good news to start the week as mortgage bonds traded higher, capturing their best levels since the middle of May. From all appearances it looks like we might see them push towards the 2007 lows we saw back in February (about 0.25 lower in rate from current levels).
While this is good news it is important to keep in mind the dynamics that are in play for the current day-to-day movements in mortgage bond trading.
During the past few months, 136 national and regional mortgage companies have closed their doors. This is historic. Any unexpected news could make rates worsen and loose their recent gains overnight.
THIS IS NOT A TIME TO BE FLOATING A RATE LOCK ON A MORTGAGE!
Long-time readers of my forecasts will now that I do like to game the market and offer advice on when the best time to lock a rate will be in the upcoming weeks and months. Make no mistake, the daily news events and state of liquidity in the bond markets are the primary driver of interest rate direction in the coming weeks and months. The technical signs I normally watch are taking a back-seat to the news.
While floating a rate lock might sound enticing, this is not a time to be greedy. Keep a historical perspective and know that rates are still at the lowest they have been in decades. The monthly fluctuations of 0.25 plus or minus do not matter in the long-term scheme of things.
Your best posturing for the uncertainty of these markets is to have your financing on long-term fixed rate products. For refinances, the time to act is now! We face a time of declining property values. Make sure to get your financing set before loan-to-value ratios restrict, as oppposed to enabling, the decisions you make for your financial security.
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