Recommendation: Lock-In at application!
We've seen some excellent Bond performance over the past week which corresponds to excellent rate sheet pricing! Our recommendation to float certainly saved everyone a lot of money but now we're recommending you lock your loans at application.
The big news on the street today was the Fed Funds Rate Cut - October 31, 2007. Having cut the rate 25 basis points to 4.25%, investors have already moved out of Bonds and into Stocks which means deteriorated pricing by approximately .125%. The reason for this is that the mortgage-backed securities market sees a Fed Funds Rate cut as inflationary.
Also creating some erosion in the Bond market and on interest rates is today's ADP Report. The report predicted 129,000 new jobs for October; that's a significantly larger number than the anticipated consensus estimate of 80,000. ADP has been quite accurate in forecasting the official Jobs number.
Again, you want to lock-in your loans at application in anticipation of some potential erosion going into Friday's Jobs Report and as a result of the deteriorating pricing due to today's rate cut.
Contact me directly for a rate quote!
Your Mortgage Advisor
323.810.2175
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