- December 23, 2007
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I’ll start my report today with a simple phrase of encouragement: Fork those Horns.
I’ve been telling my Phoenix readers to lock their mortgage rates, at application, since November 14, 2007. I don’t want to repeat what I’ve been saying; you can read all of the background here.
I’ll take a little break from my usual analysis and rely on some of the great mortgage bloggers to help me out. Consider this collection of advice:
Robert Ashby in Florida:
You see, the Fed’s favorite gauge on inflation is the PCE report. You may have already known the Fed’s “comfort zone” is between 1 and 2%. The last report, although with in the “comfort zone”, ticked up from 1.8% to 1.9%. It went virtually unnoticed since it was in the acceptable range and other economic data was relatively friendly for a Fed rate cut, which they ultimately did.
This morning, the most recent PCE data was released and guess what. My warnings came to fruition. The numbers released this morning showed year over year inflation at 2.2% (0.3% higher than the last report) and that should be making the Fed “uncomfortable” now.
Dan Green in Cincinnati:
I am predicting that rates will increase over the next 30 days, but that doesn’t mean you should necessarily follow my advice when choosing whether to lock a rate, or float it. My advice may not be appropriate for your individual situation.
From the Bankrate.com survey:
“Mortgage rates came down last month on recession fears. They’ll move up this month on inflation fears.“
Markets were caught leaning the wrong way on inflation and the adjustments may be painful.
Rhonda Porter in Seattle:
And today is not over. We could very well have other price changes. If you’re looking at refinancing your ARM into a fixed rate, it’s time to get off the fence. Waiting could prove to be an expensive decision. Especially considering we have 30 year fixed rates under 6%, underwriting guidelines are in a tightening phase, credit score pricing for prime a-paper loans are going into effect with more lenders every day and products continue to be discontinued.
I’m not alone. There’s a whole bunch of risk out there by floating mortgage rates. Lock your loan at application. Get a written lock confirmation from the loan originator with a specific rate lock expiration date.