If you’re trying to make the plunge and lock in at a low mortgage rate, you’re either going to need to depend on the advice of your mortgage professional, or take the time to “read” the market.

If you are relying on your mortgage professional to lock your rate (which in reality, should be the case), you better make sure they understand how mortgage rates change.  If your mortgage professional is talking about the following when referring to locking your rate, you better think twice about their true understanding of mortgage rate movement.

1. Excessive talk about 10 year treasury figures
2. Relying on a fed rate cut to indicate mortgage rate drops
3. Reference to prime lending rates (unless you’re doing a HELOC)
4. Checking their crystal ball

Mortgage lending rates have EVERYTHING to do with the sale and purchase of mortgage backed securities (MBS).  If your lender understands this, there’s a good chance they are in tune with what really drives interest rate changes.  They are likely following some of the more credible blogs created for mortgage professionals or subscribing to live data feeds of the MBS market.

It is not really the the function of the borrower to learn and understand the way mortgage backed securities work, what stimulates the purchase of MBS in the secondary market, and what the effects of buying and selling are.

If you just want the best interest rate from a lender that knows how to lock in at a low mortgage rate, is committed to the best mortgage offers in writing, find the best mortgage rates now!

The best place for a consumer to read up about MBS is at Mortgage News Daily. They provide a consumer section for mortgage rate indications that can be really helpful.

The fed announced they would be purchasing mortgage backed securities by the end of the second quarter (2009).  This had a positive impact on interest rates but it seems like it just won’t stick for now.  Big deal - rates are still low.

Here are some wholesale rates for today from 2 different lenders on a 30 year fixed:

4.5% 12 day lock

4.625% 15 day lock

If you are able to obtain the rates above through a mortgage broker, except to pay at least a 1 point origination fee.

Here’s a glimpse at wholesale mortgage rates through random lenders.  Here are 30 year conventional rates:

Lender 1: 4.625%

Lender 2: 4.75%

These are wholesale rates for borrowers with good to excellent credit with at least 10% down.

FHA wholesale rates are not quite as good hovering around 5.0% for the competitive FHA lenders.

We have been asked several times what wholesale mortgage rates are and what percentage they are at.  How LOW are they compared to what you end up with as a consumer?

Well, in the spirit of transparency, BeatMyBroker.com is going to start posting wholesale interest rates from various WHOLESALE lenders.  These are not lenders you can work with directly.  These will be rates from the wholesale channel.  The lender names will not be disclosed, however you will be able to see how low they are to give you a head start on your mortgage rate shopping.

Remember, these rates are not an offer to lend.  They are going to be posted to give you, the consumer, an idea of how low interest rates might be.  This is like being able to see the invoice cost of a car - well, that is if car invoices show the real cost of the vehicle.

Subscribe to the BeatMyBroker.com blog feed if you have not already done so.  It’s easy and a lot of the rates that will be posted here are going to be real eye openers to those that are not being offered competitive mortgage rates.

STAY TUNED!

This is a common question.  People want to know why mortgage brokers have an advantage over banks when it comes to interest rates (and hopefully fees).

You need to read the YSP (Yield Spread) post to understand this unless you already know what it is.

CHECK IT OUT!

A certain retail bank that starts with “W” (and it hasn’t been in turmoil like some of the other “W” ones) was offering 5.25% on a 30 year fixed mortgage.  They were charging a 1% origination fee.

The same 30 year fixed rate could be obtained at the same time through a brokerage using a particular lender at 5.0% and 1 point origination or 5.25% and NO orgination.

That means the broker would save the borrower either a whole percentage point in fees or a quarter in the interest rate.

The bank loan was equivalent to a 2.375% commission to a mortgage broker.  A fair mortgage broker will glady lower the interest rates and fees to beat the bank ALL DAY LONG.

Keep this in mind folks.  Find the right mortgage broker or mortgage bank and get better loans.  It’s that simple.  If none of this makes sense check out the mortgage resources section.

Recently, somebody asked if credit unions were mortgage brokers.

Credit unions are not necessarily mortgage brokers, however some of them do broker mortgage loans.  This basically means that they originate loans that are funded by a lender other than themselves.  This is usually practiced among the smaller credit unions and it’s not uncommon to see smaller banks that will also broker mortgages as well.

Late Rates…

Late post on rates, however, if you went to lock today, you will have noticed that rates went UP.  Sorry.

Expect near 6% on a 30 year fixed through competitive lenders.

Huh?  Yeah, that’s right.  American Express received the go ahead to become a regulated bank.  Why?  To be bailed out of course.  The financial service giant needs to refinance billions in bonds…

Rates are basically unchanged from Friday.  They are still competitive at 5.75% on a 30 year fixed for good to excellent credit borrowers.  ARM’s should be pricing better by about .25% or more.

This is not an offer to lend.

Expect rates to be worse than yesterday by 1/8th of a percent.  It could be worse by 1/4 of a percent depending on the market.  5.875% on a 30 year fixed is average, some competitive lenders still offer 5.75% at par.