Are you currently in the process of buying a home or refinancing?  Trying to decide when to lock can be a stressful and difficult decision.  In my job as a mortgage lender, I watch the markets daily to keep my clients abreast of changes to assist them in securing the best mortgage rate possible.  Please see my recommendations below.

If closing your Chicago mortgage in:

  • 5-7 Days: I recommend LOCKING
  • 7-15 Days: I recommend LOCKING
  • 15-30 Days: I recommend LOCKING unless your risk tolerance allows some substantial risk
  • 30 or more days: I recommend FLOATING, but LOCKING immediately on any improvements

The week that was:

Well, the time as has come to come to the realization that the best rates for Fannie Mae and Freddie Mac conforming loans may be behind us.  The last week brought substantial volatility and, although we did see some small periods of favorable movement, the news was generally bad.  Counter to many rate watchers expectations, the Fed’s move to buy up Treasury Bills has not had the expected impact.  This is chiefly because the buying has been in the shorter term T-bills as opposed to the 10-year, which drives mortgage rates.  Additionally, the amazing rates we saw several weeks back were the result of a market which was significantly over-bought.  With the surplus of investment unsustainable, the rate increase we have experienced was only a matter of time as investment moved back to stocks.

The good news, if you procrastinated, is that the market is now generally believed to be over-sold as investors clammered to dump their investment.  Correction may present rate watchers with some short opportunities to secure a rate better than the current market offerings.  Additionally, we may see some negative economic data as foreclosures resume after the hiatus resulting from the robo-signing debacle.  Also, the specter of continued economic woes in Europe may tip the scales back in the favor of the bond market and better rates.  Whether this will be enough to offset a continued rally in employment and earnings news is yet to be resolved.

The best advice that I can give is to act.  Procrastination will cost you as the much desired bottom of the market is, and will be, a trailing indicator.  In short, we will not know where the bottom is until it has passed.  It will be nearly impossible to time a transaction, especially the purchase of a new home, to secure the absolute bottom.  Couple this with the reality that the bottom of the mortgage rate market and the real estate market, which will also be a trailing indicator, will not coincide means that the waiting game is a fool’s folly.  There are currently great rates still to be had with National averages tracking ~0.25% above the bottom.  Historically, you cannot do much better.

30 YEAR FIXED

National Average Rate: 4.39%

Fees/Points: 0.9

15 YEAR FIXED

National Average Rate: 3.76%

Fees/Points: 0.7

Source: Freddie Mac