Friday, October 23, 2009

Phoenix Home Mortgage Interest Rate Update and Recommendation Oct 23rd, 2009 - FLOAT or LOCK?

Current Pricing of FNMA 30 Year 4.5% Bond: $100.78
-19 bps (Prior Close – $100.59)

Market Update: Once again Mortgage Backed Security (MBS) pricing is lower today after yesterday's close. Selling pressure is weighing on the Bond market, as central banks indicate that inflation is coming and it may be time to begin global rate hikes. With all of the deficit spending, bail-outs, tax credits and government intervention the fear of inflation is growing everyday. This isn't going to be easy and may prove to be even more difficult than the economic recovery. Watch for continued chatter of rate hikes to put downward pressure on MBS prices. With MBS prices moving lower, home mortgage interest rates move higher.

Economic News: Today provided some encouraging news on the national housing front. Existing Home Sales came in better than expected, at 5.57M vs. the expectation of 5.35M. Inventory levels shrunk to a 7.8 month supply, down from a recent high of 10.1 in April. This is likely due to first time homebuyers who would have purchased in 2010 purchasing now, due to the expiring first time homebuyer tax credit. The $8,000 tax credit is set to expire on November 30th, 2009.

Recommendation: LOCK

For information on home loan refinancing or purchasing your home contact The Krushinsky Team at 602-695-7575 or email

When getting a new mortgage on your Phoenix home, it's critical to consider when to float or lock your interest rate. Our recommendation doesn't apply to everyone, so if you have questions, please contact us directly.

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