Mortgage Rates began in higher territory this morning, though some lenders released improved rate sheets in the afternoon. On average, rates are still slightly worse than yesterday, falling more in line with Tuesday's offerings. The Best-Execution rates for 30yr Fixed, Conventional loans is still in a state of flux between 3.5% and 3.625%, having only recently moved up that middle ground after several weeks at 3.5%.
(Read More:What is A Best-Execution Mortgage Rate?)
This week's US Treasury auctions have been a focal point of movement in rates markets and today saw the 2nd and last of the two important ones. Yesterday's 10yr Auction was awful, and although mortgage markets were able to hold their ground by the end of the day, the movement seen during the day served to expand a trend higher in rates.
This can be somewhat confusing because mortgage lenders aren't constantly adjusting rates during the day, but the trading levels of the securities that drive mortgage rates are constantly moving. It's those rates that moved higher during the day, but not by enough to weaken rate sheets further from an already conservative level from the previous day.
The fact that we aren't spiraling out of control following today's 30yr Bond Auction is tempting to latch onto as a source of hope that rates will bounce back lower. This is, in fact, one of two possibilities. But we also think it's important to note that the aforementioned trading levels are actually flat to slightly higher in rate vs yesterday. The broader trends have been higher for rates although short term trends show promise for today.
Long Term Guidance: We'd continue to advocate against trying to "get ahead" of current market movements due to the high degree of uncertainty. For those with lower levels of risk tolerance who would consider movements in cost (despite unchanged interest rates) to be significant, or for those within 15 days of closing, or who are purchasing, this certainly favors locking. For those with longer timelines, less urgency to refinance, or wider ranges of risk tolerance, we'd note the generally "depressed" rate environment due to the European crisis and simply keep our eyes peeled for the major changes in European policy that result in noticeable changes in Best-Execution mortgage rates (i.e. the actual quoted RATE is moving as opposed to simply the COST). In either scenario, we'd consider that rates remain very close to all-time lows.
Loan Originator Perspectives
Ted Rood, Wintrust Mortgage
We're seeing more intraday volatility the past few days. That can mean
rates are trying to break out of their range, and if they do, it will be
higher. Europe hasn't had any horrific news for the past couple of
weeks, but you know there's bound to be some soon. If you like roller
coasters, floating may still pay off. If roller coasters give you a
stomach ache, may be time to pull the trigger and lock while the locking
Mike Owens, Partner with HorizonFinancial, Inc.
Lock before one of these head fakes is for real. 1 day closer to the inevitable rise in rates.
Victor Burek at Benchmark Mortgage
My outlook hasnt changed despite the rapid run up in yields. Is the
economy fixed here and overseas? If so, i missed the memo. I view
today as a turning point. If you can stomach the ride, i would float
overnight and re evaluate your pricing tomorrow morning. If you can't,
hold off til as late as possible today then lock.
Today's BEST-EXECUTION Rates
- 30YR FIXED - 3.5%, Some Approaching 3.625%
- FHA/VA - 3.375%-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).