Friday July 15, 2011 6:00 pm ET
By John Sauro
Make Volatility Work For You
Mortgage Rates started the week a bit lower as the 4.00% Mortgage Bond opened at $100.90. The Bond was down Tuesday, up Wednesday, down Thursday and up Friday finishing the week at $ 100.78. Volatility was due to concerns that the Greek debt woes would spread throughout Europe, a 9.5% China growth rate, Fed Chairman Bernanke’s comments regarding additional stimulus, recent Bond auctions and inflationary economic reports.
You can use this volatility to your advantage when it comes time to lock into a Mortgage Rate. If the market was not volatile, then your chances of locking into a lower rate are greatly diminished. Volatility allows for more opportunity. So if you missed a locking into a low mortgage Rate today, you may have another shot at it tomorrow. However, be prepared. Have your application in so that you can lock your rate with a phone call or email.
Dodd Frank to Further Restrict Credit
As if credit isn’t tight enough, Dodd Frank rules regarding mortgages is about to further restrict credit.
According to the language in the Dodd Frank Bill, anything other than a 30 year fixed rate with less than a 20 percent down payment is not a qualified residential mortgage.
No more adjustable rate or interest only mortgages, no 40 year mortgages, no mortgages with 5 or 10 percent down.
The Dodd Frank Bill goes into effect July 21st. Trade associations have been lobbying for changes to the language and government agencies have been trying to more clearly define QRM. For now, it’s wait and see.
Economic News
Moody’s threatens to lower U.S. AAA rating.
Weekly Jobless Claims fell 22,000 to 405,000. Better than the expected 410,000 but still above the important 400,000 mark.
The Core CPI came in Hot at -0.3%, more than the 0.2% expected.