Business television is abuzz this morning with talk of “four-point-five percent mortgage rates”; the clip above ran on NBC Today.  The news stems from a leaked story that the U.S. Treasury will intervene in the mortgage market, lowering rates a full percentage point below their current levels.

As cited by every journalist in every publication, however, the story is 100% speculation.  Naturally, that doesn’t stop the press from covering it.  When hope for homeowners gets spread in this manner, it’s important to remember some facts:

1. The Treasury doesn’t set mortgage rates — Wall Street traders do.  Historically, rates are based on the Supply and Demand for mortgage-backed bonds.
2. Treasury intervention doesn’t guarantee low rates.  That mortgage rates are up by a half-percent since last week proves it.
3. Zero details about the plan have been confirmed, quoting CNBC.  Everything you’ve heard about 4.5 percent rates is a guess at this point.

But, perhaps most importantly, nearly every analyst interviewed has expressed a belief that a Treasury-sponsored stimulus would apply to home buyers only.  Homeowners wanting a refinance, in other words, would be ineligible.

Mortgage rates are very low today compared to where they’ve been in 2006, 2007 and 2008.  If you think your mortgage rate is too high for this market, reach out to your loan officer to review all of your options.  If rates really do reach 4.500 percent, you can always refinance again later.

Popularity: unranked [?]

Each Wednesday, the Mortgage Bankers Association releases its Weekly Applications Survey, a detailed look at new mortgage applications submitted over the previous 7 days.This week’s report will reveal what most of us already know — plunging mortgage rates created a flood of mortgage activity.

If you’re among the many Americans taking advantage of today’s low rates, don’t forget that when your rate was “locked”, it was locked with an expiration date.

Most likely, that rate lock is for 30 days.

And, while 30 days may seem like a long time, it’s not.  Especially because rate locks made prior to Thanksgiving lose a combined 14 days to weekends and holidays, plus another 4 days to the Right To Cancel clause.

A 30-day rate lock, therefore, yields just 12 “working” days in which to underwrite and approve the mortgage and that’s not a lot of time at all.

Making matters more difficult, many lenders are ill-equipped for boom.

Not only has staff been pared down in expectation of a slowing economy, but December a prime vacationing month, too.  Lenders are short-staffed at a very inopportune time.

So, for active refinancing homeowners, the best way to preserve a 30-day rate lock is to be as responsive as possible to the process:

• If paystubs are requested, return them on the same day
• If a home appraisal is needed, schedule the appraisal immediately
• If a closing date is scheduled, don’t postpone it by a day

As mortgage rates hang near 3-year lows, the number of refinancing homeowners nationwide will grow, further taxing lenders and their staff.  If you already have a loan in process, be pro-active about it to prevent your 30-day rate lock from expiring.

Popularity: unranked [?]

Government action fueled a mortgage market rally last week, leading mortgage rates lower for the second consecutive week.Despite soft housing numbers and evidence of a slowing economy, mortgage rate shoppers found reason to celebrate:

• Citigroup was “rescued”
• Wall Street liked the new economic team
• The government pledged $600 billion to buy investment-grade mortgage bonds

These 3 elements helped drive mortgage rates to their lowest levels since January 2008 — in some cases shaving a full percentage point off the offered rate.

Homeowners responded to the dip and refinance activity reached “a frenzy“.  As evidence, at least one national mortgage bank reported more loans were locked on Tuesday, November 25 than for the first 24 days of the month combined.  Anecdotally, other lenders saw similar action.

However, low rates rarely stick around.

The last time that rates like they did last week, markets recovered within a week and rates returned to “normal”.  This week provides ample chance for that to happen again.

Throughout the early part of the week, 5 members of the Fed will make public appearances, including Fed Chairman Ben Bernanke.  With the Fed’s next meeting scheduled for December 15, markets will be looking for clues about how the Fed may change the Fed Funds Rate.

When the Fed Funds Rate falls, mortgage rates tend to rise on the news.

Then, on Thursday, retailers start announcing their “same store” sales figures for November.  This will clue us in to the true health of the economy because consumer spending accounts for two-thirds of it.  If same-store sales are dramatically lower, expect calls for a large Fed Funds Rate cut.

And lastly, Friday brings us the jobs report.  As terrible as the employment reports have been this year, it will take an especially higher number of jobs lost in November, or an exceedingly high Unemployment Rate to have much of an impact on mortgage rates.

This month, weak jobs data should be harmful to mortgage rates because more out-of-work Americans may lead to more mortgage defaults nationwide, plus additional Fed Funds Rate cuts.

(Image courtesy: The Wall Street Journal Online)

Popularity: unranked [?]