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Mortgage Rates: Still Stuck But Lender Credits Likely
Home loan borrowing costs improved again today, but Best Execution
mortgage rates were unchanged.
Nervous tensions surrounding the potential economic impact of the earthquake
in Japan sent a shock-wave through global markets. U.S. stocks suffered
and as is often the case during equity sell-offs, bond markets benefited,
including those that directly influence mortgage rates.
If that sounds familiar, it's because we wrote it
yesterday! And it still applies...
Although the "flight-to-safety" was much more
pronounced today, the net effect was only a modest reduction in consumer borrowing costs. Best execution mortgage rates are still stuck.
A flight to safety happens when investors are
nervous about owning risky assets like stocks, but do not want to miss out on
earning a return on their funds, so they allocate their money into risk-free
government guaranteed U.S Treasury debt to provide a safe-haven AND an
investment return. As benchmark Treasury yields fall on "flight to
safety" buyer demand, prices of mortgage-backed securities move higher in
unison. This allows lenders to reprice their rate sheets for the better and
gives originators an opportunity to offer fence-sitting borrowers lower
mortgage rates or more competitive closing costs.
CURRENT MARKET: The "Best Execution" conventional 30 year
fixed mortgage rate is still 4.875%. For those looking to permanently buy
down their rate to 4.75%, this quote carries higher closing costs. The upfront
cost of permanently buying down your rate to 4.75% is not worth it to
many applicants, we would generally only advise the permanent floatdown if you
plan to keep your new mortgage outstanding for longer than the next 10
years. There are some lenders offering competitive closing costs on 4.75%, but those instances are few and far between. Ask your loan officer to run a breakeven analysis on any
origination points they might require to cover permanent float down fees. On FHA/VA
30 year fixed "Best Execution" is still 4.75%. 15 year fixed
conventional loans are best priced at 4.125%. Five year ARMS are still best priced at
3.50%.
NOTE: Although Best Execution rates did not improve today, the closing costs associated with these quotes did decline. With the exception of conventional 15-year loans, borrowers who meet the requirements in the disclaimer below should receive closing cost help from their lender on Best Execution quotes.
PREVIOUS GUIDANCE: The
gains seen are STILL not enough to consider mortgage rates
"UNSTUCK". So with a high-risk event ahead (Federal
Reserve meeting tomorrow) and densely packed economic calendar in the middle of
this week, we see no reason to change our current guidance. Our
willingness to consider a long term rate recovery is the same, but there are
many reasons to remain defensive of the positive progress that has helped rates
move to one-month lows. While it's true that rates can move either
direction, they can get worse much faster than they can get better right now.
CURRENT GUIDANCE: Although
early trading seemed to suggest mortgage rates were in the
process of becoming "UNSTUCK," an unfriendly correction ensued in the afternoon hours that led to
losses which suggest bond markets are still not committed to a sustained rally. Yet. This leaves us very
much on a fence. Our intermediate outlook is for lower rates but short term decision makers must consider that mortgage rates are as aggressive as they've
been all year.
Plain and Simple: We're going to need a sustained bond market rally
to see "Best Execution" break through the 4.875% barrier. Otherwise
this is as good as it gets.
SUGGESTED READING: Bond Rally Lacks Real Money Support. Sustained Commitment Needed
"Best Execution" is the most efficient combination of note rate
offered and points paid at closing. This note rate is determined based on the
time it takes to recover the points you paid at closing (discount) vs. the
monthly savings of permanently buying down your mortgage rate by 0.125%.
When deciding on whether or not to pay points, the borrower must have an idea
of how long they intend to keep their mortgage. For more info, ask you
originator to explain the findings of their "breakeven analysis" on
your permanent rate buydown costs.
Important Mortgage Rate Disclaimer: The "Best Execution" loan
pricing quotes shared above are generally seen as the more aggressive side of
the primary mortgage market. Loan originators will only be able to offer these
rates on conforming loan amounts to very well-qualified borrowers who have a
middle FICO score over 740 and enough equity in their home to qualify for a
refinance or a large enough savings to cover their down payment and closing
costs. If the terms of your loan trigger any risk-based loan level pricing
adjustments (LLPAs), your rate quote will be higher. If you do not fall into
the "perfect borrower" category, make sure you ask your loan
originator for an explanation of the characteristics that make your loan more
expensive. "No point" loan doesn't mean "no cost" loan. The
best 30 year fixed conventional/FHA/VA mortgage rates still include closing
costs such as: third party fees + title charges + transfer and recording. Don't
forget the intense fiscal frisking that comes along with the underwriting
process.
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Anonymous Loan Representative University Mortgage Hackensack NJ 07601 |
(201) 820-4420 |
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YOUR MESSAGE HERE
Mortgage Rates: Still Stuck But Lender Credits Likely
Home loan borrowing costs improved again today, but Best Execution
mortgage rates were unchanged.
Nervous tensions surrounding the potential economic impact of the earthquake
in Japan sent a shock-wave through global markets. U.S. stocks suffered
and as is often the case during equity sell-offs, bond markets benefited,
including those that directly influence mortgage rates.
If that sounds familiar, it's because we wrote it
yesterday! And it still applies...
Although the "flight-to-safety" was much more
pronounced today, the net effect was only a modest reduction in consumer borrowing costs. Best execution mortgage rates are still stuck.
A flight to safety happens when investors are
nervous about owning risky assets like stocks, but do not want to miss out on
earning a return on their funds, so they allocate their money into risk-free
government guaranteed U.S Treasury debt to provide a safe-haven AND an
investment return. As benchmark Treasury yields fall on "flight to
safety" buyer demand, prices of mortgage-backed securities move higher in
unison. This allows lenders to reprice their rate sheets for the better and
gives originators an opportunity to offer fence-sitting borrowers lower
mortgage rates or more competitive closing costs.
CURRENT MARKET: The "Best Execution" conventional 30 year
fixed mortgage rate is still 4.875%. For those looking to permanently buy
down their rate to 4.75%, this quote carries higher closing costs. The upfront
cost of permanently buying down your rate to 4.75% is not worth it to
many applicants, we would generally only advise the permanent floatdown if you
plan to keep your new mortgage outstanding for longer than the next 10
years. There are some lenders offering competitive closing costs on 4.75%, but those instances are few and far between. Ask your loan officer to run a breakeven analysis on any
origination points they might require to cover permanent float down fees. On FHA/VA
30 year fixed "Best Execution" is still 4.75%. 15 year fixed
conventional loans are best priced at 4.125%. Five year ARMS are still best priced at
3.50%.
NOTE: Although Best Execution rates did not improve today, the closing costs associated with these quotes did decline. With the exception of conventional 15-year loans, borrowers who meet the requirements in the disclaimer below should receive closing cost help from their lender on Best Execution quotes.
PREVIOUS GUIDANCE: The
gains seen are STILL not enough to consider mortgage rates
"UNSTUCK". So with a high-risk event ahead (Federal
Reserve meeting tomorrow) and densely packed economic calendar in the middle of
this week, we see no reason to change our current guidance. Our
willingness to consider a long term rate recovery is the same, but there are
many reasons to remain defensive of the positive progress that has helped rates
move to one-month lows. While it's true that rates can move either
direction, they can get worse much faster than they can get better right now.
CURRENT GUIDANCE: Although
early trading seemed to suggest mortgage rates were in the
process of becoming "UNSTUCK," an unfriendly correction ensued in the afternoon hours that led to
losses which suggest bond markets are still not committed to a sustained rally. Yet. This leaves us very
much on a fence. Our intermediate outlook is for lower rates but short term decision makers must consider that mortgage rates are as aggressive as they've
been all year.
Plain and Simple: We're going to need a sustained bond market rally
to see "Best Execution" break through the 4.875% barrier. Otherwise
this is as good as it gets.
SUGGESTED READING: Bond Rally Lacks Real Money Support. Sustained Commitment Needed
"Best Execution" is the most efficient combination of note rate
offered and points paid at closing. This note rate is determined based on the
time it takes to recover the points you paid at closing (discount) vs. the
monthly savings of permanently buying down your mortgage rate by 0.125%.
When deciding on whether or not to pay points, the borrower must have an idea
of how long they intend to keep their mortgage. For more info, ask you
originator to explain the findings of their "breakeven analysis" on
your permanent rate buydown costs.
Important Mortgage Rate Disclaimer: The "Best Execution" loan
pricing quotes shared above are generally seen as the more aggressive side of
the primary mortgage market. Loan originators will only be able to offer these
rates on conforming loan amounts to very well-qualified borrowers who have a
middle FICO score over 740 and enough equity in their home to qualify for a
refinance or a large enough savings to cover their down payment and closing
costs. If the terms of your loan trigger any risk-based loan level pricing
adjustments (LLPAs), your rate quote will be higher. If you do not fall into
the "perfect borrower" category, make sure you ask your loan
originator for an explanation of the characteristics that make your loan more
expensive. "No point" loan doesn't mean "no cost" loan. The
best 30 year fixed conventional/FHA/VA mortgage rates still include closing
costs such as: third party fees + title charges + transfer and recording. Don't
forget the intense fiscal frisking that comes along with the underwriting
process.
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