Should I float? Should I lock? - Daily Update for Thursday, April 17, 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.

All the rosy news that came out yesterday was for not.  The stock market really liked it all, therefore since bonds move in the opposite direction of stocks, bonds took a major hit yesterday.  One major item coming out was the Beige book report.  This can act as a guide to how the Fed will be seeing and (re)acting at their next meeting at the end of the month.  The report indicated the continued problems with housing, credit and weak employment continue to plague the economy.

Last bit of bad news - the Philadelphia Fed Index came in quite a bit higher than expected.  Though the real question will be "Is this a fake positive?", the immediate answer will be the bond market not caring and getting ready to tank.

Technically speaking - the FNMA 5.5% 30 year bond plummeted below the 50 day and 100 day moving averages yesterday.  Unless some really bad economic news comes out OR stocks take a nosedive, be prepared for another nosedive in the bond market.

This is definitely the time to

     Lock your interest rate.

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