Mortgage Rates were broadly unchanged today as some lenders' rates improved while others moved higher, not to mention the many who held close enough to yesterday's levels to be considered 'unchanged.' Thus rates continue to operate very close to all-time lows with only 2 days on record with a lower average rate. Today's 30yr Fixed Conventional Best-Execution remains firmly at 3.5% with some lenders arguably at 3.375%. To be clear, lower rates are available and viable in some cases, but in general, 3.5% is still the best combination of rate and fee at most lenders (assuming 100% ideal scenarios)
(Read More:What is A Best-Execution Mortgage Rate?)
The underlying motivations for markets evolved today as new variables were added to the mix. European considerations remained as the president of Europe's central bank, Mario Draghi was out with forceful rhetoric about doing whatever was necessary to save the Euro. But today also saw something that had heretofore been absent in this trading week: a noticeable reaction to domestic economic data. Just as markets were getting over Draghi, stronger than expected domestic data put upward pressure on rates, resulting in some slightly weaker trading levels in the secondary mortgage market.
By the end of the day, however, bond markets reiterated their determination to hold relatively flat in a relatively narrow range. In other words, whether we've been gaining ground or losing ground this week, everything has happened in fairly narrow trading ranges at fairly slow speeds, hence the relative lack of movement in mortgage rates since hitting new all-time lows on Monday.
If today was any indication that markets are more attuned to domestic economic data then it bears consideration that tomorrow brings the release of the "Final" reading of GDP for the 2nd quarter. Granted, the "stuff" that happened in the economy though June 30th is largely a thing of the past, but we feel like markets are willing to infer a slightly greater-than-normal amount of significance in the economic data leading up to next week's important FOMC Announcement.
Long Term Guidance: We'd continue to advocate against trying to "get ahead" of current market movements due to the high degree of uncertainty. In the past, we would have interpreted that advice as a suggestion to lock, but in the recently "low and sideways" environment, it's probably better-read as a suggestion to go with the flow of gradually lower rates until we see the pattern definitively break. It's a reasonably safe assumption that European concerns will generally continue to apply downward pressure on rates although there are no guarantees that the right piece of news or economic event couldn't mark "the turning point" at which rates bottom out. On any given day, rates have been at or near all-time lows and in the grand scheme of things, unable to move lower as quickly as Treasuries for example. So although there is potential gain from floating, it's still a historically excellent time to lock if you'd prefer to take the risk off the table.
Loan Originator Perspectives
Ira Selwin - Vice President of Secondary Marketing - US Mortgage Corporation
Float with caution. The last two days have seen rates/pricing get a bit
worse than days past. I still recommend floating, but be ready to lock.
Victor Burek at Benchmark Mortgage
Rates continue to hold near record lows. I see no reason to panic lock
at this time. Rates will hold steady but eventually move lower. Same
advice, lock if you are within 15 days of closing. Don't hold out for a
lower rate. If you are refinancing your mortgage, make sure you ask
your LO about a no cost loan.
Matt Hodges, Loan Officer, Presidential Mortgage Group
Draghi, Greece, Spain all in the news over the past day. With each
subsequent proclamation that they will avert the major catastrophe in
Europe, the less credibility they possess. An analyst this morning
argued that the US and the UK are both racing towards 1% on the 10 year
treasury. Where does this leave us? Seemingly we should go lower -
much lower in rates. It's possible, but I think any positive news
coming out of the US will nudge rates up. Safe to float - probably, but
I'd rather my clients be sure of their mid 3% rate than gamble for low
Mike Owens, Partner with HorizonFinancial, Inc.
I continue to favor locking because as I've said before, we're 1 day
closer to a big move up. Lock and then wait to close. No sense
looking at rates every day either to see if you could have done better.
Just relax and know that you're safely locked. Many floaters will
get burned when there is a turn and locking is your insurance against
that. As busy as everyone is, it will be impossible to lock everyone
when the panic button is pressed.
Today's BEST-EXECUTION Rates
- 30YR FIXED - 3.5%, Some Approaching 3.375%
- FHA/VA - 3.25-3.5% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED - 2.75 - 2.875%
- 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).