Phoenix mortgage rates refuse to go up, regardless of my advice to lock all loans, purchase or refinance, at application. Somehow, I didn’t drink the Kool-Aid the Wall Street traders are drinking. We locked one 30 year fixed rate loan at 5.375% rate today (5.59% APR) for a $400,000 purchase money mortgage.
If you listened to my advice last week, I probably cost you an eight of a percent on rate, meaning that if you held out until today, your rate would be .125% less than last week. It is important to note that I almost am always biased towards locking rates. Inflation is still rearing its ugly head and the bogeyman IS around each corner.
I believe that the excitement of a potential half percent rate cut, by the Fed, on January 30, is already built into the market. This means that I believe that there is MUCH more risk of Phoenix mortgage rates popping up .375%, quickly, than I believe there is reward to holding out for that last eight of one percent. The risk just doesn’t seem worth the reward, in this environment.
Tomorrow, there are two big numbers coming out, the Core CPI (prices excluding energy and food), sometimes referred to as Core Inflation, and the Industrial Production Capacity Utilization Rate, which measures the level of production in this country. Both are expected to show that we are contracting, or in a recession. However, if the Core CPI is higher than expected, it could throw mortgage bonds into a free fall which leads to higher mortgage rates for Phoenix.
Too much risk for my liking. Lock all loans: purchase and refinances at application.