Mortgages Rates, continued pushing into their highest levels of the year today after yet another volatile session for bond markets. Most lenders initial rate sheets were slightly improved from yesterday earlier this morning, but market movements during the course of the day prompted widespread repricing. By the end of the day, it's questionable to continue thinking about Best-Execution in terms of 4.0-4.125% and more appropriate to shift that range from 4.125% to 4.25%. That said, the combination of rate and fee at 4.0% is still competitive at many lenders, but it's doubtful that many could offer 4.0% without some lender-related closing costs.
(read more about Best-Execution calculations).
(read more about Wednesday's Big Changes in Rates).
This is now the largest magnitude move higher in mortgage rates since October 2011. But things are potentially more painful this time due to extended period of flat, low rates, which makes the current movement much more abrupt with respect to recent norms. Things really have changed overnight.
Compounding the pain is the fact that markets pulled back from ugly level quickly enough last time, and sufficient economic risk remained for us to hold out more optimism for a return of "high 3's in the intermediate to near term future." This time around, trends are suggesting it would take a longer time to get back down to those rates, if it is indeed in the cards.
Are rates on a one-way trip higher? Despite the ugliness of the past few sessions, we still can't be sure about that. Underlying bond markets are approaching some levels that many market participants are looking to for support. Markets again today operated close to those levels without making a definitive gesture back towards recent, lower rates. Despite the higher rates today, in terms of those market levels, the Mortgage-Backed Securities (MBS) that most directly influence mortgage rates, ended the day in similar territory to yesterday. Although the absence of weaker MBS and Treasury levels is a good thing, it's not the sort of thing that it makes sense to plan on. We continue to expect things to be volatile, and ultimately, volatility can cause rates to move higher even if the day-over-day changes in bond market metrics are not.
Today's BEST-EXECUTION Rates
- 30YR FIXED - 4.125%-4.25%
- FHA/VA -3.75%, starting to edge higher
- 15 YEAR FIXED - 3.375%
- 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
- We're currently further away from the very best levels than we have been in recent months
- We've broken away from a long, stable trend and are expecting greater volatility
- Rates could easily move higher or lower, but given the above facts, there seems to be more risk than reward regarding floating
- (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).