Mortgage Rate Update for October 26, 2012

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While there may have been some hope for a slight increase in mortgage rates at the end of the week of October 26, in fact the rates dropped down again. On the other hand, lenders are started to diversify across the loan offering spectrum a bit more, looking for niches to gain in competition with each other.

In terms of availability of borrowers and a healthy market, signs showed positive at the end of this week. Friday’s reports on the economy helped short-term outlook, especially given the pensive neutral position everything has been in lately with the run up to the Presidential election in less than two weeks. GDP reports came out stronger than previous positions and consumer sentiment has not dropped or weakened. Both represent good points for the home mortgage market.

A typical reaction to good news in terms of the economy tends to be an increase in rates, big and small. Mortgage rates are no exception. However, unlike the stock market on Friday going up, mortgage rates went the opposite direction. Whatever the reason, the drop again offers borrowers a good chance to gain a slightly better borrowing edge if locking in a rate right now.

For those investing in the mortgage and bond market, Friday’s play continues to be choppy both for loan securities and bonds. Most are looking forward to the next jobs report to see what prognostications can be gathered from that data for the next few weeks.

Loan originators aren’t left out of the mix. The fluidity in the market continues to cause apprehension and anxiety about suddenly pushing more loans out. As a result, many expect additional changes in rates to occur in the short-term, recommending rate-locks for protection.

Ending the week, consumers are currently playing with expected offers of 3.5 percent on a 30-year fixed loan and 2.875 percent on a 15-year fixed. For more flexible arrangements, consumers can expect to be offered at or near 2.626 percent to 3.25 percent on adjustable mortgages.

Given all of the above, best execution will still be a bit of a guess, but for borrowers there’s clear incentive to get in the game versus what could be in a few years. For lenders the chance edge higher isn’t quite in the cards right now, but that’s not to say it won’t occur next week.

About John Krystof

John Krystof writes about personal finance and money matters for He was born and educated in Central Europe, but presently resides in New York City.

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