Wednesday, December 16, 2009

FLOAT or LOCK? Phoenix Home Mortgage Interest Rate Update and Recommendation - Dec 16th, 2009

Current Pricing of FNMA 30 Year 4.5% Bond: $100.91
+6 bps (Prior Close – $100.85)

Market Update: Mortgage Backed Security (MBS) pricing is slightly higher today from yesterday's close. For a consumer, this translates into an upfront fee decrease equivalent to .06% of the loan amount in order to obtain the same rate available yesterday for a home loan. An increase in bond prices causes home loan rates and/or fees to decrease.

We've had a floating bias since the major price deterioration over the last week. Pricing hit levels of support yesterday and rates/fees should continue to move lower.

Economic News: Consumer Price Index (CPI) was reported in line with expectations, signaling that inflation remains low for the moment. Housing Starts for November were also in line with estimates while Building Permits, which are a leading indicator of housing construction, reached the highest level seen in the past year.

Recommendation: FLOAT

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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