Mortgage rates continued lower today, bringing rates in line with the lowest levels seen during the past 4 months (officially, 6-week lows as several days have been slightly better during that time). Some lenders are now down to 4.375% for their most efficient combination of closing costs and rate (best-execution) while a majority remain at 4.5%.

Last week's big news regarding the Fed abstaining from any significant policy changes continues to benefit rates.  Several speakers from the Federal Reserve shared their opinions on the topic today and the overall tone reiterated that the economy was not yet likely to make the desired progress without full-fledged stimulus.  Apart from that, news was limited and market conditions were fairly quiet.  This is less likely to be the case as the week progresses and the tone of the economic data should have more of an impact as well.

"Economic Data" refers to various scheduled reports that are released on a set schedule, such as Thursday's GDP and weekly Jobless Claims numbers at 8:30am Eastern.  That combination makes for a relatively potent morning in that if both the pieces of data show the economy in stronger-than-expected territory, rates would likely move higher that day.  Conversely, weaker-than-expected data can help rates move or stay lower.


Loan Originator Perspectives

"Fed speakers today confirmed last week's Fed conclusion that the economy and employment outlook is less than robust. MBS improved slightly, glad to see our gains holding. While blindly floating is never a good idea, can't fault those who want to float cautiously as long as they have great communication with an originator who follows MBS action. We won't regain May rate lows, but could pick up slightly better pricing as secondary desks become more comfortable after several solid days. " -Ted Rood, Senior Originator, Wintrust Mortgage

"Bond markets are near best levels in recent months, and MBS have also followed on the same trend. It's nerve-wracking until we receive further technical commitments and data to ensure this rally will have legs to continue. The week ahead has some key data that comes to a head on Thursday. The recent jump in interest rates from mid May-September has created uncertainty within the economy to the extent that the FED last week acted totally out of character and somewhat has reduced a bit of their credibility on the street. Nonetheless, we are within a rally, 2.70 is critical, if we can break below and continue lower floating is a good option." -Constantine Floropoulos, Quontic Bank

"Optimistic is a good word for where rates may be headed, which hopefully is down. I think jobs numbers coming out next week will be rate friendly as will other economic reports. We shall see. " -Mike Owens, Partner, Horizon Financial Inc.


Today's Best-Execution Rates

  • 30YR FIXED - 4.5%
  • FHA/VA - 4.25
  • 15 YEAR FIXED -  3.5%
  • 5 YEAR ARMS -  3.0-3.50% depending on the lender

Ongoing Lock/Float Considerations

  • Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher 
  • Expectations for "tapering" (a reduction in "QE3" asset purchases) mounted over the summer and September 18th was seen as the most likely day for a potential tapering announcement
  • But the Fed decided to keep a change in QE amounts on hold until the economy could more convincingly show that rising rates (which had been rising because markets expected the Fed to taper!) wouldn't be too big an impediment to further improvement. 
  • That brings us to a more uncertain situation than we've been in recently.  It's too soon to declare the "rising rate environment" defeated, but September 18th marks our best recent opportunity for an extended hiatus.
  • The extent to which that remains true relies on incoming economic data.  Strong data will increase the speculation that the next Fed meeting will contain a reduction in purchases
  • (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).