Mortgage Rates fell today as European markets, and to a lesser extent, domestic economic data, dragged bond market interest rates lower. Rates were generally higher yesterday following the FOMC Announcement, but today's improvements in the mortgage sector bring rates very near their all-time lows. Some lenders' rate sheets are equivalent to Monday's while others are not quite there yet. In either case, the actual interest rate quoted is likely to be the same between today and Monday with only small variations in closing costs (or credit, depending on your scenario). Best-Execution remains at 3.625% for Conventional 30yr Fixed Loans.
(Read More:What is A Best-Execution Mortgage Rate?)
Yesterday, we noted that we were "on guard against further weakness, but not sweating the current weakness just yet," as well as "a lot depends on Europe." With today's Europe-inspired bounce back for rates, we're slightly less on guard, naturally, but remain defensive of recently acquired gains. Separate from the consideration of "being defensive" against rates rising, it may make more sense to consider the difficulty rates have had moving lower from current sideways range resting on all-time lows.
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
It's tempting to think logic, world events, and economic news determine mortgage rates. That's usually the case. As rates drop and lenders' turn times increase, lenders often increase rates regardless of logic, hoping to fatten their margins and/or slow submissions. This doesn't happen when loan applications are down, but sure does when lenders get swamped. We're seeing this now, with multiple lenders cutting programs and raising pricing adjustments. Anyone floating at this point needs to be fully aware that there is much more potential for rate increases than decreases, and it's not just about economics at this point.
Victor Burek, Benchmark Mortgage
If your lender has repriced better and you are within 15 days of closing, i would lock. If closing longer term, i would continue to float til you get to the 15 day window to lock. 15 day pricing offers best terms.
Jeff Statz, Mortgage Advisor, Network Funding L.P.
Yesterday, I anticipated an soon-to-be recovery of our recently worse pricing. From the uptrend and then sideways trading today, MBS continually improves as equities confidence wanes. More sideways trading may "bake" in our gains a bit better for rate sheets, but I believe there is quite a bit of stored energy ready to cause us increased volatility. In short, count your basis points and lock while you can. The only way to call a bottom for rates, is after it's occurred.
Mike Owens, Partner with HorizonFinancial, Inc.
I have never been one to float and don't advise doing it now. Sure rates could go lower, but I have the ability to renegotiate so lock it down.
Bob Van Gilder, Finance One Mortgage
So, who cares about FOMC? Lock/float or take a vacation...it's gonna be a long Summer! Rates remain great. What, me worry?
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).