Thursday, December 10, 2009

FLOAT or LOCK? Phoenix Home Mortgage Interest Rate Update and Recommendation - Dec 10th, 2009

Current Pricing of FNMA 30 Year 4.5% Bond: $101.59
-28 bps (Prior Close – $101.87)

Market Update: Mortgage Backed Security (MBS) pricing is lower today from yesterday's close. For a consumer, this translates into an upfront fee increase equivalent to .25% of the loan amount in order to obtain the same rate available on yesterday for a home loan. A decrease in bond prices causes home loan rates and/or fees to increase.

The market had significant deterioration yesterday, which caused us to lock our clients mid-day. Treasury auctions are flooding the market with supply, so we are taking a locking approach to all new transactions.

Economic News: Initial Jobless Claims came in worse than expected at 474,000 versus 455,000 estimated. Continuing Jobless Claims fell to the lowest level since February.

Recommendation: LOCK

The decision to float or lock your interest rate can save, or cost, you thousands of dollars over the life of your new mortgage. Our recommendation won't apply in all situations, so if you have questions please contact us for clarification. Also, if you're considering purchasing or refinancing and you would like us to arrange your financing please contact The Krushinsky Team at 602-695-7575 or email

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