Warren Buffett describes his investment philosophy as being fearful when everyone else is greedy and greedy when everyone is fearful.  Today, fear abounds in the mortgage bonds market and that is driving mortgage rates higher.

Rampant fear is why I'm suggesting that borrowers float their mortgage rate. I had been advising borrowers to lock loans, until all hell broke loose, on March 6,2008.  Investors are worried that the mortgage bonds they hold will be worthless.  This market is a lot like the junk bond market of the late 80s.  Those that panicked lost money; those that kept a cool head, profited.

Today a 30 year fixed rate loan is offered at 6.25%, up from 5.875%, and a 7 year ARM is at 6.125%, up from 4.875%. 

Can you see how much panic there has been in less than a week?

I think the market will calm down and traders will pay attention to the economic figures. The Consumer Price Index is due out Friday and that should be the big market mover.  Float your mortgage rates, for now.  Keep alert and keep checking back.

Contact me at (858)-777-9751 with questions or apply for a mortgage online for a quick response.

Long Beach mortgage rates skyrocketed this week and are .5% higher than Monday.  Two things have driven mortgage rates higher:

1- The threat of inflation is omnipresent in every economic report.
2- Two mortgage companies defaulted on their lines of credit.

Remember when I talked about how important it is to use a mortgage planner who subscribes to real-time MBS pricing? 

Why am I so adamant about the fact that the ten-year treasury note is not the determining factor of mortgage rates?  The statement is factually incorrect. While the two securities often move in concert, polarity can occur and sometimes does; this is one of those times.  The ten-year T-note is considered the benchmark, not bellwether fixed-income security.  This means that all other securities are compared to the 10-year T-note (we call that the

Lock all interest rates at application.  The unrest in Asian markets is bleeding to the US and traders are more concerned about the inflation risk than the possibility of a recession.  Economists believe that The Fed's easy money policy is really an investor bailout disguised as a recession aversion.  They think it's compromising  the integrity of our economy.  As commodities prices (oil, food) accelerate, so may consumer, non-essential prices.

I still favor mid-term ARMs over 30 year-fixed rate loans.  We offer a 7-year fixed period ARM at 4.875% (5.18% apr) while a 30-year fixed rate loan is a full percentage point higher..  When you consider that the average hold time for a mortgage is five years, the 7-year fixed period ARM makes a whole bunch of sense.

It should be a volatile week ahead with lots of economic data being released.  Keep checking www.mortgageratesreport.com for updates.  Want your rate quote and good-faith-estimate reviewed FREE?  Fax it to (858)-605-4230 and call (858)-777-9751 to let me know it's there.

I had a complete meltdown on my Twitter feed, yesterday.  Bernanke told the House that he was concerned about inflation but more concerned about a recession.  I initially reversed my float recommendation and subsequently changed it back to lock because I thought Wall Street would hate Ben's remarks; I was wrong.  I violated the first principle; don't fight the Fed.

The Federal Reserve is worried about a recession.  I think we can expect the Fed to cut rates next month.. The anticipation of that cut gives us a chance to see mortgage rates drift lower.  You should CAUTIOUSLY FLOAT your mortgage rate if your closing is over 7 days away; I think you'll have some room to get a mortgage rate that is .125% to .25% lower than it is today.

We're you paying attention to my Valentine's Day gift of love? I pointed out the hot curves on the 10/1 ARM; it was a full 1% lower than a 30 year fixed.  She's not as sexy as she was last week but the 10/1 ARM is still .5% better in rate than the 30 year fixed.

This morning's report is a bit more dry than the others because today will be busy.  The Gross Domestic Product showed that the economy is teetering on the brink of recession.  That news will be good for mortgage rates.  The market is volatile so always check Mortgage Rates Report for updated recommendations.