rates did a complete 180, for the second straight session. This reverses yesterday's rise in borrowing costs, taking them back in line with Monday's more palatable offerings in most cases. While some lenders are slightly better or worse than Monday, the average rate sheet continues to hover around the 3.625% Best-Execution level for 30yr Fixed, Conventional loans. That means that for all the volatility we've seen--and considering the somewhat dramatically worded "180" degree turns, the swings are merely playing out in the realm of COST whereas most any borrower would continue seeing the same interest rate every day for the past two weeks.
(What is A Best-Execution Mortgage Rate?)
Markets were more volatile during the domestic hours today, as opposed to yesterday's session which saw a majority of movement during European hours. That said, Europe remained a consideration with several afternoon headlines helping interest rates hold their ground and/or move lower. In addition, we get the sense that a quiet week of domestic data is resulting in a sort of consolidative trading pattern heading into the only noticeable thing on the calendar: tomorrow morning's announcement from the European Central Bank. These can be major market movers or major non-events. Either way, we'd stress caution in advance, especially considering that rates returned to Monday's levels for most lenders--something that we were leaning toward taking advantage of at the time.
Loan Originator Perspectives
"Finally got some overdue Euro-drama today to help drive assets back into MBS. We've felt for some time that the situation in Europe was NOT resolved, but seems that market sentiment has disregarded it. Rates improving this PM, not a huge move, but could portend the start of something bigger. Look for better pricing next few days if the trend continues!" -Ted Rood, Senior Originator, Wintrust Mortgage.
"This is a great day to watch and pull the trigger in the afternoon if we get reprices for the better. Lenders who posted rates late morning to midday will be more likely to reprice. I would advise locking anyway at days end, but hold out reprices until the last possible moment." -Mike Owens, Partner, Horizon Financial Inc.
Today's Best-Execution Rates
- 30YR FIXED - 3.625%
- FHA/VA - 3.25% - 3.5% (varies more between lenders than conventional 30yr
- 15 YEAR FIXED - 2.875%- 3.00%
- 5 YEAR ARMS - 2.625-3.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates have risen moderately from their all-time lows, making for relatively increased reward for floating at the expense of greater risks of loss.
- Rates could easily move higher or lower, and unscheduled, unexpected events can ultimately have the most say in the direction.
- Near term risks in 2013 include the upcoming debt-ceiling debate in Washington as well as the Fed's policy outlook regarding securities purchases.
- Prospects For Extending The Debt Ceiling Deadline currently seem to be preventing a move back down in rate. Passage of such legislation could further support a rising rate environment.
- (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).