12/3/07 - RATE IMPROVEMENT

30 YEAR FIXED NOTE RATE = 5.5%

LOCK RECOMMENDATION:  < ONE WEEK = LOCK

• > ONE WEEK AGGRESSIVE = FLOAT
  
• > ONE WEEK MODERATE = FLOAT
  
• > ONE WEEK CONSERVATIVE = LOCK

The Institute for Supply Management released it's index this morning.  Though the 50.8 reading was a small amount higher than expected, it was down .1% from October.  This is the slowest pace of growth in 10 months.  That is good news for bonds.  Good news for bonds is good news for mortgage rates.

In addition, Corporate profits are hurting.  A Merrill Lynch Economist put it plainly: " ``The earnings recession has already arrived.  We are going to see an economic recession in '08.''  This is also of great benefit to mortgage rates.

Though the 10 year note and Mortgage-Backed-Securities are only moderately improved, rates from lenders we surveyed this morning are improved by up to 0.5% of a discount point.

As far as technical factors, we are again pushing the bottom of the 200 day moving average on bond yields.  This means there can be resistance for rates to go lower.  Still, if we are indeed headed into recession as many believe, things could continue to improve for mortgage rates. 

***The lock recommendations represent the authors opinion.  In general, if you believe economic and technical factors will make bond yields go lower, you should float.  Otherwise, lock if you like the current rates.  The NOTE rate quoted is an example of what's available from the most competitive lenders in the nation.  Depending on your location and qualifications, origination fees may be necessary to obtain this rate.***