Mortgage Rates rose modestly today even before the FOMC-related events caused additional weakness in the afternoon. That said, the overall level of market movement and movement in mortgage rates was on the tame side compared to past examples of Fed days, and it left lenders' rate sheets in line with recent offerings, though drifting up towards a 3.75% Best-Execution level to a greater extent than the past few sessions. For the record, we'd say Best-Ex remains at 3.625, but some lenders will have moved up to 3.75% today. The cost to move back down to 3.625% in those cases is generally worth it, depending on your scenario.
(Read More:What is A Best-Execution Mortgage Rate?)
Like a toy boat in turbulent bath tab, markets experienced a ton of short-term volatility inside a very well-contained space in the big picture. In other words, the toy boat has not left the building, nor has it been thrown in the actual ocean just yet.
With the passing of today's FOMC events and the moderate bond market weakness that followed, we're "on guard" against further weakness, but not sweating the current weakness just yet. It's too soon to tell if rates have turned a corner here, and it may be impossible to tell with the current level of information. A lot depends on Europe (again), as well as the evolving landscape of the domestic economy. Sadly (or happily as the case may be), we're in the same position tonight as we were yesterday, traipsing sideways in a fairly narrow range around all-time low rates.
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 Perspectives
Ted Rood Senior Mortgage Consultant, Wintrust Mortgage
We lost ground today after the Federal Reserve statement failed to mention any further mortgage purchases. Bottom line: rates are great, more room to increase than do decrease, even given the chaos in Europe. Bigger story is lenders fleeing the FHA streamline program; Chase is the latest to announce they will not accept FHA streams they don't already service.
Victor Burek, Benchmark Mortgage
Well, FOMC has come and gone and we got basically what was expected. It was quite bumpy following the release and most lenders repriced for the worse; but mbs did rally going into close but as is common very few lenders passed along the gains. I would recommend floating overnight.
Jeff Statz, Mortgage Advisor, Network Funding L.P.
Quick to reprice for worse today, we see that lenders are still jumpy until recent gains are baked. When we soon get the minimal loss returned, it'll be a good time to reevaluate your locking position. Stay diligent.
Julian Hebron, Branch Manager, Loan Agent, RPM Mortgage
My locking bias yesterday ahead of FOMC today was a good short term win since rates ticked up slightly after the Fed left out explicit MBS buying mentions from their statement. Borrowers still have opportunity to hit lows as we press forward. Float rest of today and see how we open tomorrow.
Today's BEST-EXECUTION Rates
- 30YR FIXED - 3.625%
- FHA/VA -3.5% - 3.75%
- 15 YEAR FIXED - 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).