Locking mortgage rates at application has been my advice since our last report. Mortgage bond prices improved last week, and today, because of continued fear of defaults in the sub-prime loan market.
While my advice appears to be incorrect, I was mostly worried about inflationary data showing up in this week's figures. Consumer Confidence and Existing Home Sales are due out in the next two days and the granddaddy of all economic reports, Gross Domestic Product, is due out on Thursday.
I'm not retreating from my earlier recommendation to lock your mortgage rate at application. Fixed mortgage rates below 6% can be locked in the early part of this week. While the sub-prime defaults are causing agida for Wall Street, it would appear unlikely that the Fed will cut even farther than the .25% that the interest rate market expects.
If I'm wrong on Thursday, and GDP comes in dramatically lower than expected, I'll immediately change my posture to float mortgage rates. However, the risk of higher mortgage rates outweighs the opportunity for getting "just a little bit better" on the rate. If you can get a rate below 6% (and you can), lock it in.
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