Weekly Mortgage Commentary: Turmoil in Middle East and Unemployment Keep Rates Low

February 18, 2011

18 February 2011 – This week, we finally saw a return to normalcy. For months, mortgage professionals have felt like we had stepped through the lending looking glass into some Carrollesque world driven by completely different laws of nature and physics. We have been scratching our heads, perplexed by the mortgage markets ability to repeatedly perform counter to conventional wisdom. Time after time, we saw negative or tepidly positive economic news result in rate increases. This finally came to an end this week as mortgage pricing responded as expected.

The week started with a bit of uncertainty. We had broken a 5-day period of upward mortgage pricing, but still stood on the edge of a precipice with the very real possibility of further increases. We had been down this road before with painful outcomes. Patience was rewarded for some, however, as uprisings in Egypt spread to Bahrain, Libya and even Iran. Since nobody is sure how the Middle East is going look after the dust settles, the equities markets were presented with an uncertain outcome for a crucial global economic region. In addition, many of the economies of this region came to a screeching halt making T-bills more attractive as a safe haven further helping rates. Along with the Jasmine Revolution, we saw a 25,000 increase in jobless claims and a bankruptcy filing at Borders, which sent a strong signal that the economic recovery is still in first gear.

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My mortgage rate lock advice is slightly changed from last week. I would still advise that most ratewatchers LOCK, but, if you are closing in 7 – 15 days, you can cautiously FLOAT. In short, things have changed a bit and some opportunity for rate improvement exists, but this opportunity will likely be fleeting. There is still considerable risk of a rapid shift to the rate increases.

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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 doug@chicagobancorp.com, on his own blogs, BankerDoug.com and Vet Money Matters. He's also on LinkedIn.