Following a much weaker than expected Consumer Sentiment Report, demand for mortgage bonds has increased prices this morning, thus bringing mortgage rates down a bit more, and caused some selling in the stock market.

Some time late this morning or early afternoon will be a great time to lock as it will take wholesale lenders a little bit of time before they pass on these gains to mortgage brokers.  Wholesale lenders force Mortgage Bond gains to "hold the bar" for a certain period of time before offering those gains on down the chain in the form of better rates.  It's just like an olympic weightlifter who has to hold the bar above their head for 3 seconds before they get credit for the lift.  So although Mortgage Bond Prices are better than they've been all month, lenders play it safe until those bonds can demonstrate that they will hold that level.

As rates go down, the prices of mortgage bonds go up.  This can entice the holders of these securities to engage in "profit taking" as they likely bought the securities at a lower price.  If the profit taking is moderate to high, this will bring the price down despite weak economic data.  So we want to time the market today.  It's unlikely that the gains will extend drastically after today, at least not in the short term.  So we wait for lenders to be convinced of the good pricing and pass that on to us in the form of better rates.  This should occur in the early afternoon.

Check back with the Professional Blog at that time to see if we are still gaining.  If not, today is the day to lock.  Sure, there is a chance that even if we lock today, rates can continue to improve, BUT locking today will guarantee you the best rate of the month without risking losing it in a potential sell-off.  Any gains after today will not net you nearly as much gain as a sell-off would cost you.

Still, if you must maximize every penny, you can attempt to "play the market" by staying closely tuned to the US 10 year treasury.  If you see the yield begin to rise, check back with the professional blog to see what's going on.  In any case while you're floating, you must be ready to have your rate locked at a moment's notice.

Happy Friday and Happy Locking (later today, don't get hasty!).