Mortgage Rates finally side-stepped today, technically preserving the 5-day streak of all-time lows, but breaking the trend of incremental improvements from each day to the next. Markets were somewhat volatile in the morning but soon settled in to trading levels that implied slightly better rates. But news that Wells Fargo would exit the wholesale lending channel combined with overcapacity resulted in many lenders not offering improved pricing versus yesterday. The net effect was zero change in the average best-execution rates, currently closest to 3.5%.
(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
Nothing to see here. Rates remain crazy low. Go on vacation and check back in September---rates will be at 2%!! (/sarcasm). If you are closing soon, lock in your rate. If you can stomach the unknown, wait.
Ira Selwin, Vice President of Secondary Marketing, US Mortgage
All time lows. What do you have to lose by locking? If you still believe we are headed lower, just keep your loan officer on speed dial, and be ready to lock at any moment if the market heads the wrong way.
Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage
Biggest story of the day is Wells Fargo no longer accepting loans from brokers. Loan options for borrowers continue to shrink, and likely will keep doing so. Rates still great, limited if any room for improvement barring complete European meltdown. Sounding like a broken record, but if you're above 4.25% or so, sure ought to be examining your refinance options about RIGHT NOW!
Matt Hodges, Loan Officer, Presidential Lending Group
Which would you rather - an interest rate well into the 3's or the risk of it jumping due to unexpected good news in our economy? Further, even with additional negative headlines, how much will lenders continue to improve pricing? Think about all the loans closed in the last 3 months - lenders and correspondents and brokers will have a price to pay - early payoff penalty if they refi. There's no incentive to continue dropping rates - lock now, don't look back.
Victor Burek, Benchmark Mortgage
Nothings changed..new day, new record low interest rates. I expect that trend to continue.
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).