Mortgage Rates moved lower today extending the bounce back in rates markets that began after yesterday's 30yr Bond Auction. There were no significant economic events on tap today and most of the movement can be attributed to the sense of relief that rates "survived" yesterday after having risen appreciably over the past 2-3 weeks.
What remains to be seen is whether or not the bounce back over the past two days is the beginning of a larger move back down to previous rate lows or merely a noticeable course correction within the larger move higher in rates from late July. Those two eventualities correspond with the lock/float strategy going into the weekend. Long time Mortgage RateWatch contributor and editor, Victor Burek notes that Mondays tend to offer better loan pricing than Fridays.
The risk is those Mondays that buck the trend. If today's improvements are merely a course correction within a broader trend higher in rates, then this could be the case on Monday. That said, we're no longer experiencing the same pace of rising rates that concerned us earlier in the week, so chances are that IF rates were higher on Monday, they'd likely be close to this week's highest levels.
In the grand scheme of things, that wouldn't be too much of a jump, considering that 3.5% was available all week as a Best-Execution rate for 30yr Fixed, Conventional loans at most of the best priced lenders. There's two ways to use that knowledge though. On the one hand, yes, rates markets were reasonably resilient in the face of adversity this week. On the other hand, we're still pretty darn close to all time lows.
(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. 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
Matt Hodges Loan Officer, Presidential Mortgage Group
Rates worsened over the past week. Today we had slight improvements.
August should be locked up tight - too much volatility pressure. Inside
30 days, I'd recommend locking as well. For 45+ days, I talk to my
clients about floating in terms of risk/reward and risking a bumpy ride.
Smart when we are in the mid 3's to consider locking over floating.
Ted Rood, Wintrust Mortgage
Rates have bounced back some today in the absence of any meaningful
economic news. While we haven't seen huge movements, it still appears
we've seen lows for now, until the next Euro-bomb hits. If you have a
large appetite for risk, and adequate time before closing, floating may
be an option. If you're happy with today's pricing and like to sleep at
night, may be time to pull the trigger and stop worrying!
Andy Pada, Jr., VP - 1st 2nd Mortgage Co.
I honestly do not know where the rate trend is headed. Uncertainty
usually requires a conservative posture; in our case, lock in your loan.
But, I'll take the contrarian stance and thus heed the advice of
Oprah: "When in doubt, don't." So for now, I would hold off on locking
loans and see what Monday and next week bring us.
Victor Burek at Benchmark Mortgage
10 weeks in a row, pricing has been better on Monday than what is was on Friday.
Bob Van Gilder (BVG) Finance One Mortgage
Ah sweet Friday has arrived! Check with your Originator on rates. Many
offer weekend locks. Mull it over- but don't be left out!
Jeff Statz, Network Funding L.P.
Many times floating through Fridays can be rough, but MBS flux looks stable and consistent with trends.
Today's BEST-EXECUTION Rates
- 30YR FIXED - 3.5%
- 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).