Mortgage Rates Report

San Diego home buyers should lock-in their interest rates.  The mortgage-backed securities market is responding to two events and mortgage bonds are dropping.

The Federal Reserve Bank did not raise the Discount Rate yesterday (as expected).  Fed Chairman Ben Bernanke spent very little time discussing the mortgage liquidity crisis and talked about containing inflation more.  We see this as positive because it shows that we have a Fed Chairman who is calm, amidst a crisis.

Why change our posture from floating to locking?  China is threatening to dump it's $1.3 Trillion in bond holdings as a response to our threat of trade sanctions.  It's a game of chicken being played by diplomats.  Their sale would hurt our markets for about 3-4 months; our trade sanctions would close their largest market.  Regardless of which way the political winds blow, we think our customers should be forward locking in rates as soon as they apply for a loan.