California Mortgage Rates Report: January 6, 2008

Should California home buyers float or lock the mortgage rate? Should California homeowners refinance their home?

It's important that you read my full report; I can sometimes get long-winded when I answer those two questions. I mean, a report about mortgage rates ain't as sexy as Uma Thurman, right? Sometimes, when I'm reiterating my advice, I rely on other respected professionals' opinion, to reinforce what I'm saying. My opinion changes as often as the market changes so you have to keep coming back.

I'll cut to the chase:

If you're buying a home I think you should cautiously float the mortgage rate, right now. Here's why: The economic figures are weak and the unrest in Pakistan has investors buying fixed-income investments like mortgage-backed securities. That drives mortgage rates lower. That could turn on a dime so it is important for you to check in daily. I'll be shocked if I don't change to a lock recommendation before next week is out.

If mortgage rates are lower, why should you refinance now instead of waiting? Look at what we said two weeks ago; we all think that the rising commodities prices (READ: Oil) are putting pressure on the prices of goods and services- that could mean stagflation. Stagflation leads to higher interest rates. While we're getting a little gift in the short-term rates could be higher in 3-6 months than they are today.

If oil keeps flirting with $100/barrel, the threat of higher rates will be omnipresent. Get while the getting is still good if you're planning to refinance.

Home purchasers should CAUTIOUSLY FLOAT their mortgage rate at application.

Home owners should start the mortgage refinance process today.

Posted Sunday Jan 06