Mortgage rates moved higher today at a fairly quick pace after falling in line with their best levels of the month yesterday. The move doesn't alter the recently reestablished Best-Execution level of 3.5% for 30yr Fixed Conventional Loans, though the costs associated with whatever rate you were quoted yesterday are likely to be noticeably higher today.
(Read More:What is A Best-Execution Mortgage Rate?)
We noted that yesterday was essentially the last day before the pace of data and events quickened into the the end of the week. Additionally, today's move higher is consistent with the observation that rates moved quickly back down to the 3.5% Best-Execution level last week and had limited incentive to improve further unless/until we see more significant developments in underlying markets.
The fact that the current week didn't stand out as having the potency to coax rates out of the recent equilibrium seemed to suggest a sort of "sideways volatility." Now that today slammed the door on any additional rate lows, the risk is that this sideways volatility is beginning to increase.
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.
Loan Originator Perspectives
Julian Hebron, Branch Manager, Loan Agent, RPM Mortgage
The rate lock advisory I've had since Monday served clients well. Rates
were higher from July 24 through August 17. During that time, I'd been
saying to clients that the next dip would be their opportunity to hit
their rate lock targets, but they'd need to act within one or two days
max. This scenario has played out and rates are up today. This will
likely be the theme until year-end: rates will hit lows at miscellaneous
intervals then rise on short bits of U.S. and non U.S. ecnomonic
optimism. Clients need to set rate targets with their lenders that they
can't or won't go above, and they need to give their lenders standing
order to lock those rates when MBS markets allow.
Ted Rood, Loan Officer, Bank Star
Complacency happens. Loan officers and borrowers get used to low rates,
and assume if they're available today, they will be next week/month as
well. That's a dangerous assumption, one that often leads to missed
opportunities. The longer we stay range bound (as we've been for some
time), the larger the potential move when the range breaks. If you're
at 4.5% or above and even think you could potentially qualify for a
refinance, get a hold of a lender today!
Mike Owens, Partner with HorizonFinancial, Inc.
Still favor locking whether refinance or purchase. Eliminates risk and
worry and we're still close the bottom of the barrel. I have said and
will continue to say lock and be happy.
Today's BEST-EXECUTION Rates
- 30YR FIXED - 3.5%
- 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).