Mortgage Rates continued to improve today, though some lenders recalled rate sheets in the afternoon as bond markets moved higher in yield. Even so, the average rate sheet offerings were the best of the week and very close to Friday's all-time lows. Looking at the entire week of rates, we see things deteriorate into Wednesday and then improve through today, almost with perfect symmetry.
We've now definitively evaded the risk of rising back into the long-standing 3.875% Best-Execution territory after 2 days of 3.75%. Today's gains bring many lenders back into 3.625% territory for Conventional 30yr Fixed loans.
(Read More:What is A Best-Execution Mortgage Rate?)
Today's market movements were reasonably calm even if slightly unpleasant for bond markets. Recall that mortgage rates ARE NOT directly linked to US Treasuries, but instead are most-directly influenced by the trading levels of Mortgage-Backed-Securities or MBS. While Treasuries opened much stronger today vs yesterday and weakened more quickly into the afternoon, MBS opened just slightly stronger, allowing them to hold their ground a bit better into the afternoon weakness. As such, only handful of lenders have repriced for the worse, and most wont if current prices continue to hold in the secondary mortgage market.
Yesterday we noted that improved rates "provided a bit of breathing room for those inclined towards the higher-risk option of floating in the current environment." If you were in a position to lock yesterday, but floated, you win. SMALL VICTORIES are the name of the game in this market and to make it as close to all-time lows as we are today is a compelling signal to cash in whatever chips you may have on the table. Floating from here is an idea best reserved for those that don't NEED to refinance, or who can otherwise watch the situation play out over the longer term, willing to risk more to gain more, and able to set a "stop" at a higher rate such as 3.75 or 3.875% if the market moves against you.
Long Term Guidance: We'd continue to advocate not trying to "get ahead" of current market movements as a high degree of uncertainty is pervasive. While it's a reasonably safe assumption that European concerns will generally help rates stay lower than they otherwise would be, that "otherwise would be" part is very much a moving target. Best bet is to focus on the fact that rates are at their all time lows, and can change quickly based on events that aren't "scheduled" or able to be forecast. Risk vs reward for floating vs locking looks a bit larger than we'd like, but not out of the question for those who understand the risks and have an exit strategy if things don't go their way.
Loan Originator Perspective With Rates At All Time Lows
Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage
We're giving back a little ground in pricing today after nice rally yesterday. Bottom line I advise clients is to look at their overall benefit and not get caught up in minute to minute market gyrations. Rates are great, close to best ever, no reason to delay on starting a loan!
Bob Van Gilder, Originator / LO, Finance One Mortgage
Great opportunity to take advantage of lower rates today. Call/email, send smoke signals to your Originator!
Victor Burek at Benchmark Mortgage
Rate sheets were improved this morning compared to yesterday, but the stock lever has resulted in many lenders repricing worse since. If you are within 15 days of closing, i would recommend locking now. Any positive news over the weekend out of Europe could result in worse pricing next week. However, the best interest rates are still ahead of us.
Jeff Statz, Mortgage Advisor, Network Funding, L.P.
Monday the 11th kicks off the first case numbers to order for the FHA Streamline special. We know many that are waiting in line. Locking now is a good move, but especially necessary if your loan processing is held up. Move forward where you can, as underwriters are likely to be bogged down with new FHA Streamlines.
Kent Mikkola #353976, Mortgage Consultant , M & M Mortgage, LLC #213677
Unless you like to gamble and have room to do so; I suggest locking at these levels.
Today's BEST-EXECUTION Rates
- 30YR FIXED - 3.75%
- FHA/VA -3.75%
- 15 YEAR FIXED - 3.125 edging down to 3.00%
- 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
- Rates could easily move higher or lower, but given the nearness to all time lows, there's generally more risk than reward regarding floating
- But that will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn't always mean they're done improving.
- (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).