Browse by Tags

Like yesterday, I continue to favor locking as mortgage rates are holding steady near historically low levels. If you wish to float in hopes of rates dipping further, keep an eye on stocks. If stocks move higher, rates will move higher. If stocks sell-off, rates will either hold at present levels or decline further. There isn’t much room for rates to move lower, so there is more risk involved in floating compared to the rewards of floating. Remember, mortgage rates always rise much faster than they decline. The only borrowers who should be waiting to lock are those who are close to being able to get 15 day pricing or 30 day pricing as opposed to 30 or 45 day pricing. If you are one of these folks, you might want to consider locking before the Employment Report is released on Friday morning. Economists say that May was a strong month for the labor market. If the report is as expected, it will likely drive mortgage rates higher. ...

Mortgage rates did improve today, but the Treasury Department will announce the terms of next week's government debt auctions at 11am tomorrow. The Treasury will sell 2 year notes, 5 year notes, and 7 year notes. New supply of debt on the market can pressure interest rates higher. With rates holding near the lowest levels of the year, I continue to favor locking loans closing and funding in the next 30 days. Even if benchmark Treasury yields do rally in the next few days, mortgage rates will find it difficult to move much lower....

Reports from fellow mortgage professionals did indicate lender rate sheets to be improved this morning, however several lenders repriced for the worse around mid-day. This keeps the best par 30 year conventional mortgage in the 4.875% to 5.125% range for well qualified consumers. I continue to favor locking over floating. There are too many unknowns in the near term. We have the end of the MBS purchase program by the Fed today, more treasury supply coming tomorrow and non farm payrolls on Friday. Even if all these events go in our favor, at best mortgage rates might dip 0.125%. If these events go against us, mortgage rates could rise very quickly. Way too much to risk with very little to gain. The only loans I would consider floating would be ones that are a day away from locking on a shorter time frame which does give better pricing but I am a little reluctant to even float those. ...

After making marginal improvements yesterday, the interest rate market gave back all gains in the overnight session. This weakness was then supported by better than expected housing and industrial production data as well as a generally better outlook from the FOMC minutes. On top of that, stocks improved on the day. All of these factors combined to push mortgage rates higher at the open, and then even higher this afternoon as lenders repriced for the worse....

Reports from fellow mortgage professionals indicate lender rate sheets to be similar to Friday’s. The par 30 year conventional mortgage rate remains in the 4.875% to 5.125% range for well qualified consumers. On Friday I informed you that I would likely hold onto my lock bias until the rates market provided confirmation of a recovery rally...but would however see days where floating was acceptable overnight. For now we see the best opportunity to float overnight being later in the week after the Treasury auctions are completed. Don't let this short term strategy confuse you though, further out we still expect mortgage rates to either hold near current levels or move higher. If you are floating and intend to continue to do so until after this week's Treasury auctions, I wouldn't let short term improvements sit for too long. Until we see the market confirm a positive outlook towards interest rates, we will be "selling into strength" aka locking in on the days when lenders improve mortgage rates....

Reports from fellow mortgage professionals indicate that lender rate sheets are slightly worse today. The par 30 year conventional fixed mortgage rate remains in the 4.75% to 5.00% range for well qualified consumers. To secure a par interest rate you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs with an estimated one point loan origination/discount/broker fee. If you are seeking a 15 year term, you should expect a par interest rate between 4.25% to 4.50% with similar costs. Because rates are not far from recent five month lows, there is more to lose from floating than to gain, so I am still advising my clients to lock in their rates....