Mortgage rates ended the day in line with yesterday's levels on average, making this the second straight day with unchanged rates and unchanged borrowing costs associated with those rates. While it's not uncommon for the 'best-execution' rate to remain unchanged for extended periods, it's less common for the COST side of the equation to remain unchanged. Best-execution has been at 3.5% this week after brief stay at 3.375% heading into last week's jobs report.
Markets had their most volatile day of the week as the stronger-than-expected Jobless Claims data caused problems for bond markets early in the session. Stronger statements on the economy tend to put upward pressure on rates, all things being equal. Of course, all things aren't equal these days--especially inasmuch as the Fed's bond buying programs are concerned--and the weakness had a hard time making much headway after 10am. Things got more volatile in the afternoon and some media outlets cite a rumor that the WSJ was set to print a piece calling the Fed's continued bond-buying into question in some way. Whether it had a material effect or not, both stocks and bonds moved weaker into the afternoon and some mortgage lenders raised costs and released new rate sheets late in the day. Those reprices are accounted for in our calculation of 'unchanged,' however.
Loan Originator Perspectives
“MBS Bit of a seesaw on MBS markets today as a strong 30 year Treasury auction offset the weekly unemployment report. After all's said and done, we're virtually unchanged from last few days' pricing. There's something to be said for stability, but LO's and borrowers need to avoid complacency. With no ceiling in sight for equities, there's always the potential for rapid rate movement." -Ted Rood, Senior Originator, Wintrust Mortgage
"Rates are excellent. Not the lowest of the low, but close enough. I would lock to eliminate the need to track rates daily. So little to gain and so much to lose. " -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).