Mortgage Rates held steady today, keeping them in line with all-time lows. There was plenty going on in markets today, but not much of it had an impact on rates. The most hotly anticipated event was Bernanke's first day of congressional testimony as part of his semiannual report on the economy. The secondary mortgage market moved into stronger territory initially, and then weaker, but the swings weren't enough to cause lenders to adjust rate sheets mid-day. This keeps Best-Execution on Conventional 30-yr Fixed loans in the 3.5% neighborhood for the best-priced lenders though 3.625% remains in the mix.
(Read More:What is A Best-Execution Mortgage Rate?)
There are three great thoughts in the "originator perspectives" section tonight, each of them representing a sort of different take on the market. The interesting thing is that despite making different suggestions, all three constitute sound advice. As with many things, there's a large degree of personal preference involved in how you approach locking/floating these days. There is no "sure thing." Rates have certainly been lower, longer than they ever have been and we're clearly dealing with unprecedented levels of downward pressure from Europe.
Downward progress in rates would be slow, but perfectly possible. In that sense, if you want to wait it out and don't mind setting yourself a rule to lock if the market moves against you by a certain amount, that's certainly a viable option. On the other hand, rates are at all-time lows, and depending on where you're coming from in terms of your existing rate, it can make a lot of sense to simply "lock and move on."
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
Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage
The longer rates settle into the current range (3.5% to 3.75%), the greater the temptation to assume it's "the new normal". Whether it is or not, bottom line is those paying over about 4.5% are wasting money every day they stay in their current loan. Rates may continue to drop, if so that's great, but only for those pursuing loans!
Bob Van Gilder, Finance One Mortgage
Why wait? Grab that mid 3 rate today and be happy!!
Victor Burek, Benchmark Mortgage
Hope floats...keep floating unless within 15 days of closing.
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).