Mortgage Rates held steady to slightly weaker today, though some lenders recalled rate sheets in the afternoon as bond markets improved. That helped the average Best-Execution rate get back near Friday's offerings, which were among the best of the week last week. Over the past two weeks, rates have been operating in a fairly narrow range resting on all-time lows. Today's rates are closer to those lows than most of the other sessions.
On Friday, we noted that the gains brought many lenders back into the 3.625% Best-Execution territory. That continues to be the case today, though several lenders have yet to reprice positively and are still closer to 3.75%. Either way, it's fair to say that we're now hovering fairly consistently between 3.75 and 3.625 after being stuck at 3.875% for ages.
(Read More:What is A Best-Execution Mortgage Rate?)
It was a choppy and volatile day for most markets, at least if we count the global market open which saw heavy buying in stocks and selling in bonds. When bond markets sell-off, prices move lower and yields move higher. Movements in those yields often equate to the interest rate movement in the mortgage market, albeit by varying degrees.
The level of connection between broader markets and mortgage rates was fairly subdued today. But for the most part, the bulk of the damage done to bond markets by news of Spain's bailout, was seen in the overnight hours. After some early morning jitters, bond markets kept improving into the afternoon, ultimately allowing some of the positive reprices in the mortgage market. Apart from reaction to the Spanish bailout news, there was little else on the calendar today driving markets.
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've seen lender rate sheets somewhat worse than it should be, given the price of mortgage backed securities. That sometimes means rates have room to improve as lenders become more confident in their pricing models. Floating still involves risk, despite the daily European chaos. Risk versus reward probably favors locking if you're not a gambler.
Brett Boyke Senior Mortgage Banker, Wintrust Mortgage
Color me surprised by the way the mortgage and bond markets are performing today. I really thought we would see an adverse response rate wise to the Spain bail out, and we would see that fade towards mid week.
Jeff Statz, Mortgage Advisor, Network Funding, L.P.
MBS are looking to release some of the potential energy stored from last week's sideways trading. This would be a great time to lock. If choosing to float, I would check the Rate Watch section in the morning and again in the afternoon for signs of weakness, keeping your hand over the Lock button.
Kent Mikkola #353976, Mortgage Consultant , M & M Mortgage, LLC #213677
Regardless of the room lenders may have to give up any more credit, floating is a risky proposition.
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).