rates moved slightly higher again on Tuesday, continuing a gentle drift higher from the lowest levels in several weeks on Friday. While yesterday's rates were arguably in line with most of last week's offerings, today's weren't quite comparable. That said, they certainly haven't risen back to the previous week's levels or even to last Monday's levels for some lenders. 3.625% continues to be the most common Best-execution rate for 30yr Fixed, Conventional loans with today's deterioration seen in the form of slightly higher borrowing costs. Buy-downs to lower rates continue to be available and can viable options for some scenarios.
(What is A Best-Execution Mortgage Rate?)
Markets were exceptionally slow yesterday, and the general level of activity and volatility increased today as expected. There were more instances of economic data today, both in Europe and in the US, where a stronger-than-expected reading on the non-manufacturing (or "services") sector helped stocks hit fresh highs ("all time" for the Dow, but "not quite there yet" for the broader S&P). The same sort of increase in the level of activity (and potentially, volatility) will likely be seen through the end of the week when the important Employment Situation Report will be released. Even before that, the economic data becomes significantly more capable of moving markets (and consequently, mortgage rates) as early as tomorrow morning. If the data proves unfriendly to rates, the damage would be done before the first rate sheets of the day are available.
Loan Originator Perspectives
"If you locked on Friday you did the right thing, especially consumers. I
am still a believer that there is underlying headline risk that is
brewing in the background and will eventually allow for a push lower in
rates. That being said, with the average 30 year rate around 3.5%,
locking should be an easy decision right now. The more time you have
before you need to close may allow for some speculation into the
almighty NFP employment report on Friday, however beware as that can
lead to great disappointment just as easily." -Constantine Floropoulos, Quontic Bank.
"We continue to lock price sensitive clients and are very
cautiously floating clients with more risk tolerance to see if
Treasuries and MBS hold at current levels, because if so, rates could
improve slightly." -Julian Hebron, Branch Manager, RPM Mortgage.
"Bonds continue to erode on a seemingly daily basis. Stocks shrug off
all news to rise to multiyear highs. Sometimes you just can't fight
momentum, and right now there is little/none in the bond market. I've
been locking my loans, glad so far I've done so. Floating now equals
limited upside, feels more like gambling that floating at this point." -Ted Rood, Senior Originator, Wintrust Mortgage.
"The next few days will most likely move the rates one way or the other.
Pricing today is only slightly worse than the best pricing we have had
in quite a while. You should strongly consider locking today unless you
know for certain the jobs data is gonna be weak." -Victor Burek, Open Mortgage.
"I have a strong lock bias, and can't think of any reasons
to float in this environment. Until we see some sort of stock market
pull back or correction, rates will be under the stock lever. I'm a
little surprised rates are still this low considering the S&P
action. I believe that the NFP report might be a disappointment and
if so this could really help rates. We'll see on Friday. " -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 but consistently since hitting their all-time lows in September and October 2012.
- Regardless of global or domestic economic weakness, the subsiding fear of a disorderly EU breakup will continue to prevent rates from getting back to those lows.
- This is very likely to be the case unless a similarly panic-inducing event were to come into focus, or if a disorderly break-up regained the spotlight.
- Sequestration, negative growth, and generally choppy political and economic environments around the world DO NOT constitute that sort of panic.
- This is a "rising rate environment" until further notice, though pockets of recovery and consolidation can provide smaller-scale opportunities against the larger-scale backdrop.
- (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).