Should I float? Should I lock? - Daily Update for Tuesday, February 12, 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.

Again - with little scheduled economic news to take guidance from, bonds are looking for direction from the stock market or anything else that pops up. For instance - Warren Buffet offered to provide funds to the various bond insurers to help with the defaults that are occurring. This quick news item caused the bond to drop by 16 bps. As things shake out we will see what the longer term reaction is. (Remember sell on the fear, buy on the truth)

Technically speaking - the FNMA 5.5% 30 year bond continues to fall towards the 50 day moving average. In this current vacuum of information the bond will drift along path of least resistance, which happens to be down.

With this, the recommendation on the short term for interest rates continues to be to

Lock.

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