As the light week of data continues, only one partially relevant report is being released, the oil inventories. The relevance of this report is due to the inflationary impact of oil prices. There is no direct impact on mortgage backed securities (MBS).

The trend upward in price for MBS has continued causing yield to drop (lower mortgage rates). Overnight, foreign stock markets had a large sell off and the Dow is soon to follow suit. Typically, fixed income bond and treasury markets benefit, when the stock market sells off, and remember we are not in typical market these days.

Recent data shows that the LIBOR rate is dropping. The LIBOR is a rate that one bank borrows from another, which is a good signal that the credit freeze is starting to thaw, and banks may be willing to lend to each other.

My bias is to float, and as always you must consider your risk tolerance. The last few days have been a good run and are most likely due for a correction. With a sprint like we have had, eventually we need to slow down and take a breather.

Closing in the near future? I would suggest locking today and removing the risk, not a bad idea.

Long term closings, the risk of floating could pay off. But as stated many times, it is better to lock when you should have floated, then it is to float when you should have locked.

Cheers,

Ian Bennett
Mortgage Banker