Market Insight
Holiday Home Loan Shoppers Should Be Extra Vigilant
December 22, 2009 by James K Barath, CMPS · Leave a Comment
Mortgage pricing worsened Monday, driving mortgage rates to their highest levels since October.
The day’s action was drastic, too.
Some banks issued as many as 3 rate sheets Monday – each worse than the preceding and one reason why rates got so bad, so quickly, is because this week marks the beginning of mini-Vacation Season on Wall Street.
Between now and January 4, 2010, be prepared for big swings in pricing from day-to-day. Shopping for a mortgage could be a challenge.
The relationship between vacation days and mortgage rate volatility is rooted in how mortgage rates are “made”.
- Conforming mortgage rates are based on the price of mortgage-backed bonds, a security that is sold on Wall Street
- Mortgage-backed bonds can’t sell without a bond buyer and a bond seller agreeing to a specific sale price
So, during vacation week, when the total number of market participants are less, there are fewer opportunities for buyers and sellers to meet at a specific price. As a result, bond prices rise and fall with a higher velocity than on a “normal” day. Rallies and momentum plays are exaggerated, too.
Now, mortgage market action like this can work in your favor, or it could work out of your favor. Unfortunately, on Monday, rates moved out of favor.
This rest of this week is stacked with market-moving economic data. The data could be better-than-expected, or worse-than-expected. Either way, markets will react a little more feverishly than normal. Therefore, if you have a chance to lock a favorable rate, consider taking it.
Before long, the rate could be gone.
Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.
About the Author: James K Barath is a Certified Mortgage Planning Specialist and your Northwest Indiana FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James K Barath today and Get Qualified for Your FREE FHA Home Loan Approval!
His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy! 
