Should I float? Should I lock? - Daily Update for Wednesday, January 23, 2008

Here are the daily thoughts on floating or locking if you are asked by your clients.

As always - consult your favorite mortgage professional who will be able to offer the best advice for YOUR unique situation.

Though a slow week in terms of scheduled economic news, it has been a busy week in terms of fears, over reacting, and amazing events. Yesterday, the Fed dropped the Fed Funds rate 3/4 of a point down to 3.5%, which in turn lowered the Prime Lending rate to 6.5%. The last time the Fed dropped the rate like this was back in 1984. The last time the Fed dropped the rate outside of a regular scheduled meeting was just after the 9/11/2001 attacks.

Stock Markets around the globe gave a mixed message to the Fed's decision yesterday. China's and Japan's stock markets both rallied while Europe's markets all fell. Our own markets show a continued downward trend.

Technically speaking - the FNMA 5.5% 30 year bond has appeared to broken through 2.5 years high making mortgage rates appear to be dropping even further. Even with bonds still in an overbought state it appears some of the old truisms are not holding.

The flight from risk to safety is appearing to hold, so while the stock market continues to slide then the recommendation will be to

... float.

Edit - Stock Market has recovered. Bonds have lost what they got at the beginning of the day. It would be best to

Lock!

To learn why one should Float or Lock -

Check out Should I float? Should I lock? & Reasons to Float or Lock