Mortgage rates began the day in much better shape compared to Friday's latest offerings, but market volatility in the afternoon prompted most lenders to reprice.  The net effect was a rate sheet environment that ended up in similar territory to Friday though a small portion of the improvement remained.  This keeps Conventional 30yr Fixed best-execution remains at 4.5%.  Buydowns to 4.25% continue to make sense for some scenarios, and rates in general are at or close to their best levels since July 23rd.

Today's volatility was the pure product of financial market volatility.  There were no 'cause and effect' relationships between headlines, events, and the resulting movement in interest rates.  The willingness to move at a brisker pace today foreshadows the rest of the week's potential volatility.  Unlike last week, there is more on the calendar this week, and more of it is relevant to interest rate movements.  The first of these potentially meaningful events arrives tomorrow morning in the form of the Retail Sales report.  If the results are far from the estimates in either direction, and if rates markets respond, it will provide more confirmation that markets are ready to move a bit more in the coming weeks after holding almost perfectly flat last week.

Loan Originator Perspectives

"We anticipate choppy movements over the next few weeks with the lack of physical bodies handling trades and the larger vacancy of investors as the summer winds down. That being said we are still in a bullish position as to the prospects of floating due to some technical data we are watching. Can't say it's safe to float, but if the closing has at least 3-4 weeks time we are advising on considering floating as the market may improve. Longer term outlook is obvious with FED tapering coming soon, however we feel that the actual taper will trigger more negative for stocks than bonds. The damage to bonds has already occurred. Overall we are watching technical levels on benchmark treasuries as our primary indication for direction. Range has been tight, we expect a breakout on 10's to drop below 2.5% before breaking 2.75% on the way up and are looking to capitalize on this movement. If closing within 2 weeks, you should be locked up." -Constantine Floropoulos, Quontic Bank

"The slow and steady of last week looks to be a thing of the past. Rates opened better and worsened in the afternoon. Locking at this time is not a bad idea as floating is always risky."  -Mike Owens, Partner, Horizon Financial Inc

"Action picking up today after last week's sedate market. Locked a purchase loan (pricing had improved from Friday's) just prior to multiple lender price worsens.  Today's volatility is likely a harbinger for rest of the week." -Ted Rood, Senior Originator, Wintrust Mortgage


Today's Best-Execution Rates

  • 30YR FIXED - 4.5%
  • FHA/VA - 4.25%
  • 15 YEAR FIXED -  3.625%-3.75%
  • 5 YEAR ARMS -  3.0-3.25% depending on the lender

Ongoing Lock/Float Considerations

  • After rising consistently from all-time lows in September and October 2012, rates challenged the long term trend higher, but failed to sustain a breakout
  • Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher
  • Fears about the Fed's bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed indicated their intention to taper bond buying programs sooner vs later
  • The June 19th FOMC Statement and Press Conference confirmed the suspicions.  Although tapering wasn't announced, the Fed made no move to counter the notion that they will decrease bond buying soon if the economic trajectory continues
  • Rates Markets "broke down" following that, as traders realized just how much buy-in there was to the ongoing presence of QE.  These convulsions led to one of the fastest moves higher in the history of mortgage rates and market participants have not been eager to be the among the first explorers to head back into lower rate territory until they're sure they'll have some company.
  • (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from 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).