Mortgage rates were higher again today, extending yesterday's movement following the FOMC Minutes.  This morning's Jobless Claims report showed a slightly higher number of initial unemployment filings, but rather than help push back against yesterday's weakness, this did more to help rates level-off.  Had the data been stronger than expected, the damage would have been worse.  Conventional 30yr Fixed  quotes (best-execution) are most prevalent at 4.75% with 4.875% being the next closest level for ideal scenarios.

The world of interest rates is in a precarious position right now.  Uncertainty and speculation are high.  Staffing levels are low.  News and events between now and labor day will move markets and cause ups and downs for rates, yet the news and events arriving after that are incontrovertibly more important. 

More specifically, September 6th represents a definite fork in the road for interest rate movement.  Even if we consider that the longer-term move in rates could continue higher OR level-off and reverse, Sep 6th's Jobs report will certainly affect the trajectory of that path.  The time between now and then can go either way depending on the data. 

Of course it's been the case that we've had far more days moving up in rate over the past 3 months, and indeed we've often discussed the concept of a "rising rate environment until further notice."  It's also tempting to try to get ahead of the periodic corrections in the longer term trend, but also dangerous.  All we can know right now is that the next 6 trading days before Labor Day weekend represent an opportunity for another one of these consolidations.  Again, this is most likely to be decided by next week's data with tomorrow being more of a superfluous wild card.

Loan Originator Perspectives

" Same story different day. We continue to walk on egg shells, as we wait for further guidance on the Fed's next step. We have a few good days of modest improvements only to be wiped out in a few hours of selling. I am advising all of my clients to lock in at application secure their rate and if the market improves prior to closing we can always renegotiate their lock terms" -Kenneth Crute Branch Manager Prime Mortgage Lending Inc

Today's Best-Execution Rates

  • 30YR FIXED - 4.75%
  • FHA/VA - 4.25% or 4.75%
  • 15 YEAR FIXED -  3.75%-3.875%
  • 5 YEAR ARMS -  3.0-3.50% 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).