Alert to LOCK
The Fannie Mae 30 year fixed mortgage bond is currently down 50 basis points and we have already worsened points by 1/8th once today. A 50 basis point shift typically moves rates by more than an 1/8th in points so another re-post worse could be forthcoming. Why the rise in rates? The Fed's QE2 policy to purchase $600B in Treasuries is expected to have - some speculate - a "super ordinary" impact on inflation. Just look at gold. Gold is considered a hedge against inflation and it's now trading at a record high $1441. A very important aspect to consider is that inflation - nonexistent over the past two years - erodes bond pricing; i.e., mortgage rates go up.
Lock or Float?
The Fannie Mae bond is currently trading just above an important level of support at the 50 days moving average. If the bond breaks below that level rates may spike up quite quickly. Don't risk it. Rates are just a little worse than last Thursday and Friday but waiting for rates to return to those levels could prove very costly. Advice: lock before 9:00 PM this evening. Remember, to lock, your application must first be pre-approved so the first step is to apply online.
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