Mortgage rates were mixed but flat on average, though they began the day in stronger territory. This morning's rates sheets were the best in several months, but market volatility prompted numerous mid-day price changes. By the end of the day, the average lender was right back in line with Friday's latest rate sheets. Conforming, 30yr fixed best-execution remains at 4.25%.
Little, if anything, has changed since the onset of the government shutdown. Rates continue to be paralyzed by uncertainty, as market participants continue to fly blind without economic data data. There are a few events on tap for this week that can nudge rates out of their very narrow range, but even then, traders really need to see the employment figures (and other data delayed by the shutdown) before committing to a significant move in either direction.
This doesn't mean that rates can't get better or worse on any given day, simply that the magnitude of the movement will continue to be relatively subdued. More ominously, it can suggest a sharp move higher or lower when we ultimately break out of the narrow range.
Loan Originator Perspectives
"Debt Ceiling, Govt Shutdown...hmmm, wonder what our crisis looks like in
the European newspapers. Anyhow---Lock if you are content with the
rate. No one can predict, with accuracy, what will happen and or when it
will happen." -Bob Van Gilder, Finance One Mortgage
"Borrowers had a short window to lock at improved rates this AM, and
those who were working with alert, MBS-savvy loan officers likely did so
before rates worsened this PM. No real news influencing rates, just
continued DC Drama and anxious markets." -Ted Rood, Senior Originator, Wintrust Mortgage
"We remain range bound as the market awaits economic data delayed with
the government shut down. If you floated over the weekend, you were
rewarded with better pricing today. I continue to favor locking when
within 15 days of closing. Longer term closings, I would continue to
float on a day to day basis." -Victor Burek, Open Mortgage
"With limited economic data the markets focus was directed again towards
the debt ceiling drama. While we wait for data to return, rates
continue to hold a narrow range. As long as they stay blocked from
further progress, the only real reason to float is if you're hoping the
glut of post-shutdown data is much weaker-than-expected." -Constantine Floropoulos, Quontic Bank
Today's Best-Execution Rates
- 30YR FIXED - 4.25%
- FHA/VA - 4.0-4.25%
- 15 YEAR FIXED - 3.375-3.5%
- 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's resulted in the first meaningful "pause" in the "rising rate environment" since it began in earnest in May, 2013. This won't necessarily be an ongoing move in the other direction, and we're nowhere near May's rates yet, but it's a good opportunity to get back in the market if rising rates pushed you out sometime between now and then.
- 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).