If closing your Chicago mortgage in:

• 5-15Days: I recommend LOCKING
• 15 + Days: I recommend FLOATING

It is important now to realize that although rates are down, markets can turn bearish very quickly.  Fence-sitters should decide soon on their course of action or risk higher rates .  Economic data that can affect mortgage interest rates.

Monday

• January Consumer Credit

Tuesday

• $32 Billion 3-year Treasury Auction

Wednesday

• MBA Weekly Mortgage Applications
• January Wholesale Inventories
• $21 Billion 10-year Treasury Auction

Thursday

• Weekly Jobless Claims
• January Trade Deficit
• $13 Billion 30-year Treasury Auction
• February Treasury Budget

Friday

• February Retail Sales
• University of Michigan Sentiment
• Business Inventories

If closing your Chicago mortgage in:

• 5-7 Days: I recommend LOCKING
• 7-15 Days: I recommend Cautious FLOATING
• 15 + Days: I recommend FLOATING

This is a unique week as turmoil has continued across the Middle East.  Libya specifically has broken out into the most violent and brutal of the countries experiencing unrest and the current regime has voiced that they have no intentions of backing down.  Backed by loyal militia and mercenaries, they have moved to crush opposition.  This has savaged the equities markets and driven oil prices up significantly.  As a result, bonds are once again in vogue and mortgage rates have responded favorably.  Ratewatchers stay tuned as this is the opportunity for which you have been waiting.

The week ahead for economic data that can affect mortgage interest rates:

Monday

• December Consumer Credit

Tuesday

• Case/Shiller Home Price Index
• Consumer Confidence
• $35 Billion 2-year Treasury Auction

Wednesday

• MBA Weekly Mortgage Applications
• Existing Home Sales
• $35 Billion 5-year Treasury Auction

Thursday

• Weekly Jobless Claims
• Durable Goods Orders
• FHFA Housing Price Index
• New Home Sales
• $29 Billion 7-year Treasury Auction

Friday

• Quarterly GDP
• University of Michigan Consumer Sentiment

If closing your Chicago mortgage in:

• 5-7 Days: LOCK
• 7-15 Days: LOCK
• 15-30 Days: LOCK
• 30 or more days: LOCK

The week that was:

This week mortgage rates continued their slow climb.  Coming off of a previous week of generally positive economic data, equities markets continued to charge ahead putting more pressure on bonds.  While there were small glimmers of hope that the trend would cease, these were short lived and resulted in a flatenning of the trend as opposed to a reversal.

30 YEAR FIXED

National Average Rate: 5.05%

Fees/Points: 0.7

15 YEAR FIXED

National Average Rate: 4.29%

Fees/Points: 0.7

Source: Freddie Mac

If closing your Chicago mortgage in:

• 5-7 Days: I recommend LOCKING
• 7-15 Days: I recommend LOCKING
• 15 + Days: I recommend LOCKING

The week ahead for economic data that can affect mortgage interest rates:

Monday

• December Consumer Credit

Tuesday

• $32 Billion 3-year Treasury Auction

Wednesday

• MBA Weekly Mortgage Applications
• $24 Billion 10-year Treasury Auction

Thursday

• Weekly Jobless Claims
• December Wholesale Inventories
• $16 Billion 30-year Treasury Auction
• January Treasury Budget

Friday

• December Trade Balance
• University of Michigan Mid-Month Consumer Sentiment

If closing your Chicago mortgage in:

• 5-7 Days: LOCK
• 7-15 Days: LOCK
• 15-30 Days: LOCK
• 30 or more days: LOCK

The week that was:

This week unfolded a bit unexpectedly.  Egypt exploded in riots and Yemen followed suit.  The accompanying jump in oil prices coupled with uncertainty that this brought to world markets should have staved off the recent upward pressure on rates, but this was not to be.  A mix of favorable earnings and positive jobs data pushed the Dow over 12,000.  The dragged pricing for Fannie Mae and Freddie Mac mortgage pricing up with it.  The big day is Friday when official employment data hits the street.  This will either be a boom or bust for mortgage rates.

30 YEAR FIXED

National Average Rate: 4.81%

Fees/Points: 0.8

15 YEAR FIXED

National Average Rate: 4.08%

Fees/Points: 0.8

Source: Freddie Mac

If closing your Chicago mortgage in:

• 5-7 Days: I recommend LOCKING
• 7 or more days: I would suggest FLOATING with extreme caution.  With this much volatility, I would LOCK on any improvements as well as any major upward repricing.

The week that was:

This week could have been disastrous for ratewatchers as there was a lot of economic data, some T-Bill auctions and a bunch of corporate earnings reports.  In addition, this was the week of President Obama’s State of the Union address and the release of the FOMC policy.  While we did see and uptick in mortgage pricing after the government’s input, it could have been much worse.  Although received favorably, President Obama’s remarks did not signal any great revelations and the continued stress on “investment” in the economy sent a signal of greater debt.  As far as the FOMC was concerned, there was a definitive signal that there could be continuance of the quantitative easing strategy as well as a belief on their part that the economy is generally improving.  Coupled with some positive earnings reports, this news was enough to send the Dow over 12,000.  Subsequently, the price of Fannie Mae and Freddie Mac conforming loans saw an increase.

All of this changed Friday as unrest in Egypt sent investors running.  The ensuing flight to quality reversed the trend in mortgage pricing for the better.  Although many lenders have not repriced the trend is that this will likely occur.  I would recommend that everyone with loans in process closely monitor the market and keep in close touch with their bankers to ensure they take best advantage of the situation.

30 YEAR FIXED

National Average Rate: 4.80%

Fees/Points: 0.7

15 YEAR FIXED

National Average Rate: 4.09%

Fees/Points: 0.7

Source: Freddie Mac

If closing your Chicago mortgage in:

• 5-7 Days: I recommend LOCKING
• 7 or more days: I would suggest FLOATING with extreme caution.  With this much volatility, I would LOCK on any improvements as well as any major upward repricing.  You do not want to miss the boat.

The week that was:

A bit of dancing this week as rates dropped a bit early on and returned recent levels by Thursday.  The impetus for the drop was light trading on Monday and continued rebound from the week prior.  Procrastinators, however, were punished as the equities market reacted favorably to an increase in the sale of existing homes and continued recovery in employment with a decrease in the 4 week moving average of new jobless claims.  All in all, we found ourselves back where we started.

30 YEAR FIXED

National Average Rate: 4.74%

Fees/Points: 0.8

15 YEAR FIXED

National Average Rate: 4.05%

Fees/Points: 0.8

Source: Freddie Mac

If closing your Chicago mortgage in:

• 5-7 Days: I recommend LOCKING
• 7-15 Days: I recommend FLOATING, unless low risk tolerance.
• 15 + Days: I recommend cautionary FLOATING

The week ahead for economic data that can affect mortgage interest rates:

Wednesday

• MBA Weekly Mortgage Applications
• December Housing Starts
• December Building Permits

Thursday

• Weekly Jobless Claims
• December Existing Home Sales
• December Leading Economic Indicators
• January Philadelphia Fed Business Index

Question: Can I still get an 80/15, 30yr fixed mortgage loan with no Mortgage Insurance (MI) and no escrow account?

Answer:  Solutions like this are few and far between these days. There are some second lenders who can get you to 90%, but a 95% loan to value is rare indeed. I would ask you “what’s your aversion is to mortgage insurance?” as it may be your only option for a conventional loan up to 95%. It is often tax deductible and actually provides less risk, as your second loan would likely be a Home Equity Line tied to the prime rate. This could cost you a lot if rates spike. I recommend that you look at single premium MI which would actually bear an upfront cost with no monthly mortgage insurance cost. You could possibly even negotiate a deal where the seller pays this.

Be careful about working under old paradigms. It seems as if you may not have explored all of your options due to an inherent aversion to MI.

If closing your Chicago mortgage in:

• 5-7 Days: I recommend LOCKING
• 7-30 Days: I recommend LOCKING on any pricing improvements
• 30 or more days: I recommend FLOATING with extreme caution

The week that was:

This week was a bloodbath for mortgage rates.  This was primarily due to two major factors.  First and foremost, there has been a slew of economic news that favors investment in equities.  Specifically, Europe has, for the time being, begun the hard road to solving their tribulations with countries such as Ireland undertaking significant austerity measures.  In addition, U.S. lawmakers have favored a short-term approach which will keep lower taxes and extend unemployment benefits, which favors stocks over bounds for investors.  Secondly, deep rooted concerns about the long-term impact from excessive borrowing and the Fed move for Quantitative Easing have eroded the bounce back effect that we should have seen on employment and housing numbers.  In short, Treasuries and, in turn, the mortgage backed securities that drive rates cannot gain traction for a recovery.  In the end, the market may correct, but the rate improvement may be slight and hard to predict.

30 YEAR FIXED

National Average Rate: 4.61%

Fees/Points: 0.7

15 YEAR FIXED

National Average Rate: 3.96%

Fees/Points: 0.7

Source: Freddie Mac

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