24 September 2010 – There is a training aid used for astronauts called the Vomit Comet. It is an airplane that moves on an elliptical path to simulate a weightless environment. In short, it basically moves up and down to keep the occupants in a suspended state. This is the best comparison that I can muster for mortgage rates over the past few weeks. We are all floating in a Lending Vomit Comet and this week was business as usual.
Mortgage rates started the week strong with a major rally on the heels of a policy statement from the Federal Open Market Committee that they would provide additional support to bolster the economy. Since rates cannot get much lower, the belief is that they will purchase Treasury Bills to increase the money supply. Bonds and mortgage rates reacted favorably. Additionally, higher than expected new jobless claims set the stage for a great week to lock. Data on the sale of existing homes increased by over 7%, however, which gave lenders pause putting negative pressure on mortgage pricing. So, we were again basically flat.
My recommendation for those with loans in process is unchanged. I am recommending any of my clients closing within 15 days to lock their rates due to the unpredictable nature of the market. For clients closing more than 15 days from now, I am recommending floating with very keen eye the market for lock opportunities and to act quickly on mortgage market improvement.Email This Post To a Friend.