With the all important Employment Situation report due out tomorrow morning at 8:30am, floating remains risky. If the report is better than expected, we could see mortgage rates rise quickly. Making this situation extra sensitive is the fact that while benchmark interest rates have continued to rise over the course of the week, MBS have held steady. If the data is better than expected and benchmark rates continue to rise, MBS coupon prices will have more room to fall then benchmark Treasuries. Another problem with floating into tomorrow’s report is that it is released prior to lenders issuing rate sheets. If the data is better than expected, there is no time to get your loan locked before lenders reprice for the worse.
Because mortgage rates have held steady in the middle of the range in which we base our lock/float recommendations upon, I would say locking today is still the best move. This range has been our friend, following the strategy of locking at the price highs and floating at the price lows has worked very well over the last few months.
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