Mortgage Rates Face Afternoon Threats On Unprecedented Fourth Day of All-Time Lows
Mortgage Rates continued lower today, marking the FOURTH consecutive day at new all-time lows. Once again, rates markets continued to benefit from the perennially tense situation in Europe. Considering that we often talk about low Treasury yields indicating that investors are seeking safety from risk, it's interesting to note that Europe's equivalent to our 10yr Treasuries hit all time lows today. The Euro was once again at 2+ year lows.
Into the morning hours, today was very much like yesterday, with interest rates in Treasuries and mortgage markets mostly holding steady thanks to Europe. But there was more data on tap for domestic markets today. A combination of today's excellent 10yr Treasury Auction and somewhat disappointing meeting minutes from the last Federal Reserve Announcement leave bond market slightly weaker at the moment. As of this moment, we have yet to see any negative reprices from lenders, but suspect that some of them might adjust rates higher if markets continue to deteriorate into the afternoon. Current rate sheets, however, are good enough for new all time lows and to firmly solidify 3.5% as Best-Execution.
(Read More:What is A Best-Execution Mortgage Rate?)
Long Term Guidance: We'd continue to advocate against trying to "get ahead" of current market movements due to the high degree of uncertainty. 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
Bob Van Gilder (BVG), Finance One Mortgage
Low, lower, lowest...rates remain unquestionably, irrefutably, undeniably LOW. Take advantage today!!
Brett Boyke, Senior Mortgage Banker, Wintrust Mortgage
In response to my rhetorical question from yesterday: do you think rates will go lower? Your answer should have been yes. Feeling lucky after 4 straight days of blackjacks?
Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage
Question I am wondering today (as rates hit all time lows again) is "When do the bond vigilantes step in and refuse to buy 10 year bonds yielding 1.5%? Similar situations have happened in the past, and rates went through the roof after being exceptionally low. Bottom line, don't take anything for granted, get your loan started NOW if you haven't already!
Kent Mikkola, Mortgage Consultant, NMLS 353976
How much longer and lower do you think rates can go? The safe bet is to lock in record low rates today.
Jeff Statz, Network Funding LP
We're seeing a bit of late day selling. There's still time for rates to potentially be adjusted today, so stay vigilant.
Today's BEST-EXECUTION Rates
- 30YR FIXED - 3.5% - 3.625%
- FHA/VA -3.5% - 3.75%
- 15 YEAR FIXED - 2.875% - 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).