Today the FOMC reduced the Fed Funds rate by a half point to 3%. A half point rate cut was expected by Traders and so far we do not have significant changes (yet) to mortgage interest rates. However, if you have a HELOC, your interest rate has just gone down again. The Fed also reduced the Discount Rate to 3.5%. The Fed is leaving the door open for future cuts as needed. You can read the press release here.
We still have Thursday’s PCE report and Friday’s Jobs Report which both highly impact mortgage interest rates. If either indicate strong inflation, we will see mortgage rates increase.
Mortgage rates have been very volatile these past few days. Yesterday morning, I posted that the 30 year conforming fixed was under 5% and by the end of yesterday, mortgage rates had increased by 0.375% to rate or around 1% in fee.
Rate shoppers lost out big time if they did not lock.
Rates are continuing to rise at this time. Please don’t dilly dally with your mortgage interest rates. There are fewer Mortgage Professionals to assist you in our current market and many of us experienced (and I’m still seeing it today) banks being “clogged” with people trying to lock…websites “down for maintainance”…etc. By the time a Mortgage Professional can get through to lock in a loan, the rate is gone. Bam.
Next week has offers a full menu of events that promise to impact mortgage interest rates:
- FOMC Meeting on Wednesday, January 30th. (If the Fed drops the Funds Rate…mortgage rates may rise).
- Thursday, January 31 will bring us several economic reports which will indicate inflationary levels such as the PCE and the Chicago PMI.
- And as next Friday is the first Friday of the month, we will wrap up the week with the Jobs Report.
Again, I highly recommend that you lock in your interest rates for conforming loans and make sure it’s for enough time for your transaction to close. A possible bright spot: the conforming loan limit may be increased…no promises but this will be great help for the JUMBO market from $418,000 – $620,000.
Bye for now!
Update January 24, 2008 at 2:55 p.m.: I just priced the 30 year fixed conforming at 1% origination/discount…I can barely lock in 5.5% (APR 5.642%) based on my usual criteria for “Friday’s Rates” (which I will be posting tomorrow). Is it 5 yet? 😉
On the first Friday of every month, the Jobs Report comes out. Tomorrow is the big day. As I’ve written about this topic before, this economic indicator tends to have a huge impact on mortgage interest rates.
It is the consumers choice to float or lock a mortgage interest rate. My preference is generally always to lock. Especially during these historic times in the mortgage industry. Locking in a mortgage interest rate not only secures that rate for your loan, it may also preserve that mortgage program. With some lenders pulling back on certain programs, a few of them are honoring the loans that are locked and underwritten.
Please do not assume that your mortgage rate is locked. Make sure you have a written lock confirmation (a Good Faith Estimate is not a lock confirmation). If you have a mortgage in process, you may want to contact your Mortgage Professional to confirm it is locked and what their read is on the current situation.
It pays to be extra cautious right now.