Friday, December 12, 2014 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 -
Mortgage rates kept on improving today after a wild week that saw a little bit of everything. Unfortunately, as much as the Mortgage Backed Securities (MBS) improved, the actual rates from lenders did not correlate as much. The most prevalently quoted conforming 30yr fixed rates for top tier borrowers was somewhere again between 3.875% and 4.000%, depending on what fees made the most sense with each rate. 3.75% did make its way however into the picture.
More declines in rates today as the equity market continues to pull back. Trying to make sense from the swift fall in oil and commodity prices. Stocks so far have moved increasingly higher this year because there is nowhere to invest and justifying the increases on trailing earnings reports, not forward earnings. Interest rates and oil prices are becoming strung out and should rebound next week into the FOMC meeting where it is widely expected the Fed will signal an increase is closer that many expect, excluding me. The meeting is expected to eliminate that "considerable period of time" from policy statement.
What does the decline in energy and commodities really mean in the wider perspective? A lot of opinions from bullish stocks and the economy to worries demand for oil is so low that it suggests the global economies are much softer than what is currently consensus. I do not have a clue either. I can make good arguments on each extreme - so too can the Fed's economist and FOMC members. Next week's meeting will be filled with positives about the economic growth, about the employment condition and whatever juices up investors. The Fed is scared to death to say anything contrary. The proof is in eating the pudding, and it really doesn't taste too good. You simply cannot grow an economy when 70% of its population is in one way or the other struggling. Consumers are willing to pay for the new IPhone but so far not much buying of homes that have been the real generator for the US economy since 1947.
The DJIA and NASDAQ had big losses for the week, and the 10yr closed at 2.08%.
In summary, the mortgage rates have hit their lowest point of 2014. Do you want to lock or hope for lower in the future? Personally, I am a risk taker, and so far, if you followed that lead, you have been rewarded. We know that history shows us that reversals in this trend will occur and sometimes abruptly so caution is necessary for borrowers who are floating their rate looking for improvement. I guess the question is, "DO YOU FEEL LUCKY?"
Remember, if you want to know the benefits of locking your rate today versus floating, simply give me a call at 314-744-7806 or visit my website at www.CallTheMoneyMan. I have access to real time Wall Street data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.
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