Source: Bloomberg

The Fed has been buying Mortgage Backed Securities (MBS) like we all know.  And, the plan has worked.  Mortgage rates, while still volatile, are bouncing around their all-time lows.

And I have been just as busy as everyone else, taking loan application for refinances and for purchase loans just about as fast as I can take them.  I love it, I must admit.

While most people I speak with I am able to help, there is a small percentage of Atlanta area borrowers who, when we go through the loan application, decide to hold off on locking in their rate, on an intuition that mortgage rates will drop further still.  When I ask what makes them think such, the response is some form of “I just feel like they will go down further”, or “it’s a gut instinct”.

My advice?  Remember that the bond market determines mortgage rates; and there are real economic forces that move bonds up or down.  Those market forces have gotten a big help to push rates downward from the Strong Arm of the Fed, buying MBS.  Even though their buying is ongoing, that has now been factored into the pricing of Mortgage Backed Securities.  Going forward, we will see all the traditional influences on MBS begin to take more prominence, and even out the market.  And, yes, market sentiment regarding the economy will weigh in.

Remember, there is one 800-lb. gorilla that will possibly step into the market in early January, as the SEC meets to consider revising the current Mark-to-Market rules.  And if they do revise the rule, it will bode very well for stocks, but mortgage rates will rise. Click here to spend 7 minutes watching the video explaining this one in more detail.

So, if you are around Atlanta and looking to refinance your mortgage, lock in on any dip in rates, and count your blessings.  It is too easy to get caught up in greed and miss the whole party…i.e. to be coveteous of the absolute lowest rate, and not lock at all, only to wake one morning in the not-too-distant future and find you missed the lows by a whole point or more.  Missing by .125% will not make nor break any homeowners.  Missing by 1.5%…well that could break the bank.  So, get the apps in and lock on any dip, is my best advice.