Should I Lock or Float? This Week- August 5, 2013

Todays_market_8-6-2013When the U.S. economy hit rock bottom a few years ago we called it the Great Recession, and saw the mortgage banking industry come to a screeching halt. A thankful by-product, after the dust settled – we were treated to some of the lowest interest rates in our lifetime. Those historically low rates may have run their course as the past week brought encouraging economic news from several sources, and with that, rates are rising.

For my clients of late, I have been in a “locking” mood, and based on the technical’s – I am not changing my mind anytime soon. As you can see from the graph on your right, Mortgage Backed Securities (MBS) have traded below a ceiling of resistance going on 10 days now. The economic news this week shouldn’t have enough push, to get above that ceiling.

In addition,  the President of the Chicago Fed, a few minutes ago, told reporters he expects growth in the second half of the year to accelerate to a 2.5% annual rate, from its anemic 1% rate over the past three-quarters, and reach over 3% growth rate in 2014. We understand that stronger economic data will force the Fed to “quite likely” slow down its $85 billion a-month asset purchases of Mortgage backed securities and treasuries – Thus rates may continue to rise based on his comments.

What’s Coming Up This Week

This week’s economic news includes the Senior Loan Officer Survey set for Monday, the U.S. Trade Deficit and Job Openings reports for June on Tuesday.

On Wednesday, a report on Consumer Credit will be released and the Weekly Jobless Claims will be out Thursday, along with Freddie Mac’s mortgage rates report. No mortgage or related news is scheduled for Friday.

NOTE – for updates on the fly, don’t be afraid to click on my twitter feed and get the latest news in real-time.

We have been advising our clients to lock on any improvement in rates and stop gambling for better rates. Data is still pointing toward an improving economy, and thus rates should continue to rise in the long-run. Take advantage of any blip of improvement.

  • Closing in 7 days:          LOCKING
  • Closing in 7-15 days:     LOCKING
  • Closing in 15-30 days:   LOCKING
  • Closing in 30 days:        LOCKING


For More information please contact Dan Tharp @ 916-257-1470 or email Dan at

 The information contained in this training has been prepared and distributed for educational purposes only.  This training information shall not be construed as a guarantee of loan approval; All loans are subject to underwriter approval.

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