The most important mortgage news today is an announcement by the FED of a "proposal" to introduce some new rules for mortgage originators intended to protect borrowers against certain practices that may have contributed to the meltdown.  Stay tuned for more info on this later in the day.

In addition, the European Central Bank has injected a huge $200 billion into their banking system to assert its commitment to fighting the credit crunch. 

Housing starts, no surprisingly, have fallen to their lowest rate in 16 years, down 3.7%.  Estimates were at 3.2%

None of this is hugely important news to the bond markets.  All three items have a slightly positive effect, which have led the bid price on a FNMA 30 year 6.0% coupon back up to 101.23.  This will add to the rate improvements most lenders released yesterday afternoon. 

30 YEAR FIXED PAR NOTE RATE : 5.75%

LOCK COMMENT:  As bond prices approach their 2 year highs yet again, locking is always the conservative play.  The only thing that is really going to "open the door" for rates to go lower is some relief from the lingering fear of inflation.  If we get that "relief," rates can go down more.  Until it comes, I would recommend locking.  If you believe that the rest of the week's economic numbers will be inflation friendly, and/or show signs of a weak economy, the floating could be the way to go, but it is a bit riskier considering the inflation problems of last week.