I'm locking mortgage rates at application for all loan types, regardless of closing date. I've been recommending locks for three weeks. Rates improved about .375% so I was incorrect. Why then, should you heed my advice now? Let's look at this chart:
This is a chart for the last 30 days for mortgage-backed securities. When MBS prices go up, mortgage rates come down. In this case, I noticed a meteoric rise in MBS prices in the last week in April (off a low of 99.5). I called for clients to lock on May 2, 2008, when the 30 year fixed rate mortgage was at 5.875%. Today, it has improved to 5.625%
MBS prices improved to 100.75, then retreated to 99.75. I was locking as prices improved to 100.75 again (rates lowered). They closed down today at 100.62. If they retreat below 99.75, we could see a 6.0% 30 year fixed rate mortgage.
Lock all loans. I'm more about not losing money rather than making money when I analyze execution. I think the risk of higher rates, in the next few weeks, is greater than any chance of lower rates.
