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Bart Castelli

Interest Rates - Lock or Float?

Friday, January 17, 2014 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 - Message

We have seen commentary being bearish about interest rates, the happenings on economic improvement, and the Feds withdrawing from the monthly purchases, one would think that the rates would increase.... but the picture is now slightly bullish. In other words, the talk is not matching the actual trading at least at the moment.

There is no doubt in anyone's mind no matter who you talk to that interest rates are going to increase this year. However, we have seen in the past week that both treasuries and MBS markets are looking better The key component that is a benchmark for those who try to look at this is the 10 Year Treasury, which has been fighting the resistance at 2.80%.

How much more can these rates improve? With all the data that has come out, with all the information and surprise being analyzed from every angle and perspective, we do not believe rates have much improvement left. That being said, we have talked with clients the past few days advising them that they certainly can float - but be very cautious as these measurements can turn quickly. The old cliche can be stated here that 'pigs get fat and hogs get slaughtered" is something that must be considered. We are not going to see the rates where they were last summer (even though a number of us in the mortgage and real estate industry would love to see such).

As stated in yesterday's commentary, I am saying to float cautiously as the short term looks positive, but stay in contact with your lock desk to do such in a moment's notice. The underlying fundamentals are not conducive to lower interest rates. Any weakness in the stock market right now will support fixed income levels, with lower mortgage rates following that trend.

If you have any questions regarding your financing, please give me a call at 314-744-7806 or visit us at

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