The State of the Union Is Strong, But Mortgage Rates Are Just So-So

January 28, 2011

Daily Mortgage Updates

Doug Katz Mortgage Broker 28 January 2011 – This week presented a huge amount of risk for rate watchers. With a slew of economic data, a Fed meeting, the State of the Union address and some T-bill auctions, there was the potential for rates to hit some new highs. Luckily, this did not occur.

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From the government we got what we expected. The FOMC statement was very close to their last one with a general opinion that the economy is recovering at a less than desirable rate of speed and that a continuation of quantitative easing is necessary. The President’s address was generally well received, but the lack of any earth-shattering policy shifts meant that the financial markets were generally unmoved.

In the markets themselves, the T-bill auctions went well, earnings were mixed, housing and employment were expectedly bad, but not as bad as they could have been. In aggregate, investors were encouraged enough to keep the equities rally going pushing the Dow over 12,000. This had the expected effect on rates and the cost of borrowing did increase a bit from Monday’s open, but not enough to hit the panic button.

My mortgage rate lock advice for my clients is unchanged and still based heavily in defensive thinking. IF closing in 7 days or less LOCK. If closing in 7 to 30 days, I would suggest FLOATING with extreme caution. With this much volatility, I would LOCK on any improvements as well as any major upward repricing.

Update: Rate watchers may be rewarded today through fallout from the unrest in Egypt. Continued concerns about the region and continued instability have savaged equity markets with most indices showing over a 1% drop. This has bolstered the bond market and repricing is likely in favor of better pricing on Fannie Mae and Freddie Mac mortgage programs. I would recommend that anyone currently with a loan in process monitor these movements closely and strike if the opportunity for a good rate presents itself.

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About Doug Katz

As the Senior Mortgage Banker and Sales Manager for Chicago Bancorp, Doug not only originates loans for his personal business, but also oversees affiliations with banks and other financial institutions that depend on Chicago Bancorp to meet their client’s lending needs. In this role, Doug directs the day-to-day mortgage sales operations of over 25 branches in a multitude of Chicagoland’s diverse communities. He brings to these relationships a wealth of industry experience and a dedication to an exceptional client experience that has established Chicago Bancorp as Chicago’s pre-eminent mortgage solution providers. Prior to joining Chicago Bancorp, Doug attended and graduated from West Point. Upon graduation, he was commissioned as an officer in the United States Army Artillery, where served 5 years in numerous roles and in various deployments include service in Kuwait. In addition to his Bachelor’s Degree from West Point, Doug holds an M.B.A. from Loyola University Chicago, where he was also inducted into the Beta Gamma Sigma Honor Society. He also served as President for the West Point Society of Chicago from 2003 to 2005 and still serves on the Board of Directors. When not working, he spends his time with his wife and three children in their hometown of Oak Park, as well as pursuing his passions for fitness, cooking and the banjo. Doug can be reached by phone at 312.738.6079, by email at, on his own blogs, and Vet Money Matters. He's also on LinkedIn.

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