Mortgage rates moved gently higher today compared to Friday's calamitous surge higher, which was among the 5 worst days for rates of the past two years. Though the movement was extreme, it followed nearly 8 weeks of improvement that had taken rates to their 2013 lows last Wednesday. And while that's no major consolation to those hoping for lower rates, Conventional 30yr Fixed 'best-execution' only moved up from 3.375% to 3.5%. Earlier in 2013 it briefly went as high as 3.75%, but had been most frequently at 3.625%.
Bond markets including MBS (the 'mortgage-backed securities' that most directly influence mortgage rates) had little to go on today by way of motivation and guidance. The higher rates resulted from an aimless drift that turned slightly negative after stock markets began advancing toward new all-time highs. Though stock prices and bond yields have been moving in opposite directions in the long term (especially since mid 2011), they tend to correlate during the day most of the time (especially when there's a lack of digestible data for bond markets). The quiet calendar will continue to be a factor throughout the week.
Loan Originator Perspectives
“MBS sulked today with small losses from Friday's jobs report sell off. Don't get me wrong, pricing is still great, but last week appears to have set the bar for current low rates. I'm locking tight deals as they are submitted, floating feels like a losing bet until we get some negative data to offset Friday's report.” -Ted Rood, Senior Originator, Wintrust Mortgage
"Glad I locked everything I could last week prior to the jobs numbers. Much worse rates when the market opened Friday and today is the same. Maybe we'll get some of this back soon, but now is a good time to lock on dips or take what you can now." -Mike Owens, Partner, Horizon Financial Inc.
Today's Best-Execution Rates
- 30YR FIXED - 3.5%
- FHA/VA - 3.25% (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
- After rising consistently from all-time lows in September and October 2012, rates are challenging the long term trend higher
- Lingering concerns over European finances have helped keep Core EU rates low, which has some "spillover effect" onto US Rates.
- Domestic economic weakness has played a role in helping balance the outlook for Fed bond-buying.
- We're at a crossroads where we'll soon see if the "rising rate environment" remains intact or is successfully challenged.
- (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).