Mortgage rates rose marginally today after two days of significant improvement. Wednesday and Thursday's strong gains followed the release of the latest FOMC Minutes which showed that the Fed was much closer to announcing additional monetary easing than many had thought. Today's movement isn't nearly as large as the past two days and doesn't do anything to change the Best-Execution rates that prevailed yesterday. For Conventional 30yr Fixed Loans, that's generally 3.5% with some lenders able to offer 3.375% with increased costs and others still best-priced at 3.625%.
(Read More:What is A Best-Execution Mortgage Rate?)
It shouldn't come as much of a surprise that the past two days of improvement weren't able to maintain their trajectory. Our thoughts about this yesterday are just as applicable today:
The fact that we've gotten back to the previous Best-Ex rates so quickly should tell you something. Namely, further improvements such as those seen yesterday and today are less likely now that we've reached these levels. This isn't to say that they're not possible or even that we're leaning one way or the other, but simply that there has been a big, fast push back to previous territory. It didn't find much cause to stray very far from that range before the sell-off of the past 3 weeks and we think it will need more motivation if it's going to stray too far from it now.
The next few weeks are likely to center on current rates with a higher-than-normal amount of volatility through mid September. For now, the trend is positive, but we saw signs of it balancing out today. We wouldn't advocate complacency if you see a rate that you like, especially if it gets you back close to a rate you thought was "lost" just 24 short hours ago.
In other words, we left and we've come back. Where we go from here will be a different journey, but it has the potential to be a big one. September 4th through 14th contain some of the most important potential market moving events of the year, and next week is the only thing standing between that and us. As such, it could be fairly volatile, but without resolving the big-ticket events from the first part of September, it would take a fairly big surprise in news or data to get rates much lower.
Long Term Guidance: We'd continue to advocate against trying to "get ahead" of current market movements due to the high degree of uncertainty. The long-term direction of rates has been down, down, down, for the past
year. At some point, this will turn, and when it does, we highly
recommend that you're prepared by drawing your OWN line in the sand as
to how much rates would have to rise before you lock at a lost. That's
assuming you don't simply lock as soon as you're able. 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. We'd also consider that rates remain very close to all-time lows and uncertainty to all-time highs. This also favors locking.
Today's BEST-EXECUTION Rates
- 30YR FIXED - 3.5% - 3.625%
- FHA/VA - 3.5% (varies more between lenders than conventional 30yr Fixed)
- 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
- 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).