are just slightly better than unchanged on the day. Best-Execution remains at 3.875% for conventional 30yr fixed loans, and the slight improvements seen today have benefited the borrowing costs required to obtain those rates. (learn more
about how we calculate Best-Execution in THIS POST). Some of the stratification between lender offerings seems to be lessening now that underlying markets have demonstrated the ability to hold recent levels.
Particularly, MBS (the "mortgage-backed securities" that most directly affect mortgage rates) recently reached new all-time highs. The fact that this is occurring at the same time rates are back at new all-time lows is no coincidence. But it also means that there are some physics-based considerations for MBS prices (higher prices = lower rates). Of course we're not talking about real physics, but consider the adage "what goes up, must come down." Now, this isn't a universal truth in bond markets, and certainly it was heard on several occassions over the past 5 months, with everyone who mentioned it turning out to be wrong. So we're not saying MBS prices are destined to go lower simply because they've hit their all-time highs (meaning rates would likely move higher off all time lows).
What we ARE saying is that things have never been as good as they are right now in terms of MBS and the rates that lenders are offering. We certainly don't rule out the possibility that things could get even better, but we'd sure hate to have missed out on this opportunity if they don't. The comforting caveat is that if things do improve, that progress will likely be slow and potentially limited in scope.
Tomorrow is the last day until Friday's Employment Situation Report (aka "jobs report," or "NFP") brings a high-risk situation into the mix. NFP, which stands for the the reports chief
component "Non-Farm-Payrolls" is generally regarded as the single most
important piece of economic data each month. Even against the current
backdrop of European headlines exerting more and more influence on
domestic markets, it's immensely important. Based on where markets sit
right now, we think that rates are somewhat vulnerable if the report is
better-than expected. In other words, there's a certain natural level
of "push-back" at current rate levels anyway, and a bullish jobs report
would probably accelerate that.
This, of course, is contingent on the report coming in with
better-than-expected results. If the opposite happens, rates could
Today's BEST-EXECUTION Rates
- 30YR FIXED - 3.875% mostly, increasing presence at 3.75%
- FHA/VA -3.75%
- 15 YEAR FIXED - 3.25%, some lenders venturing lower, some completely stuck at 3.25%
- 5 YEAR ARMS - 2.625-3.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates and costs continue to operate near all time best levels
- Current levels have experienced increasing resistance in improving much from here
- There are technical reasons for that as well as fundamental reasons
- Lenders tend to get busier when rates are in this "high 3's" level
and can throttle their inbound volume by raising rates or costs.
- While we don't necessarily think rates are destined to go higher,
given the above facts, there seems to be more risk than reward regarding
- But that will always be the case when rates
operating near historic lows
- (As always, please keep in mind
that our talk of Best-Execution always pertains to a completely ideal
scenario. There can be all sorts of reasons that your quoted rate would
not be the same as our average rates, and in those cases, assuming you're following along on
a day to day basis, simply use the Best-Ex levels we quote as a
baseline to track potential movement in your quoted rate).