Kansas City Real Estate Overland Park Homes

I’m locking mortgage rates at application for all loan types, regardless of closing date.  I’ve been recommending locks for three weeks.  Rates improved about .375% so I was incorrect.  Why then, should you heed my advice now?  Let’s look at this chart:

This chart is pricing for the last 30 days for mortgage-backed securities.  When MBS prices go up, mortgage rates come down.  In this case, I noticed a meteoric rise in MBS prices in the last week in April (off a low of 99.5).  I called for clients to lock on May 2, 2008, when the 30 year fixed rate mortgage was at 5.875%.  Today, it has improved to 5.875%

MBS prices improved to 100.75, then retreated to 99.75.  I was locking as prices improved to 100.75 again (rates lowered).  They closed down today at 100.62.  If they retreat below 99.75, we could see a 6.0% 30 year fixed rate mortgage.

Lock all loans.  I’m more about not losing money rather than making money when I analyze execution.  I think the risk of higher rates, in the next few weeks, is greater than any chance of lower rates.