Mortgage rates fell appreciably today, moving to levels not seen since early November.  The bond markets that underlie mortgage rate movements continue to benefit from heavy selling in stock markets around the world.  At home, the S&P lost a substantial 40 points.  While US Treasuries are a more direct beneficiary to such panicked selling than mortgages, rates still managed solid movement.  In fact, many of the best-qualified borrowers at the most aggressive lenders may be looking at quotes of 4.25% now for conforming 30yr fixed loans (best-execution).  4.375% is still quite prevalent depending on the scenario and lender.  When adjusted for day to day changes in closing costs, rates fell an equivalent of 0.06% today, making for a .13% move over 2 days.

Today's rates are getting to be very close to the lower end of the range that's prevailed since mid 2013 (generally 4.25-4.75% with some overrun on either side).  The move lower is already bigger and has happened faster than many were expecting.  Some time in the next two weeks, we'll either see that range solidified with a move back toward higher rates or we'll see markets continue in the same vein as most of January.  One of the most important events in that process is likely to be Friday's Employment Situation report.  Until/unless that data firmly suggests a bounce, the rally technically still has room to keep rates moving lower as long as those moves are being supported by weakness in stocks and other global "risk" markets.


Loan Originator Perspectives

"Slumping equities and poor manufacturing data gave us a nice rally in MBS today, and rates dropped accordingly. We've broken several key levels of resistance; 10 year Treasuries yields are down to 2.57%, a dramatic drop. Trend is now our friend, great time to buy a home or start a loan!" -Ted Rood, Senior Mortgage Planner, Wintrust Mortgage

"Rates continue their steady decline. But as recent history has taught us, rates go up faster than they drop! If you are happy with the rate being quoted, take the money and run." -Bob Van Gilder (BVG) Finance One Mortgage


Today's Best-Execution Rates

  • 30YR FIXED - 4.25% -4.375%
  • FHA/VA - 3.75%
  • 15 YEAR FIXED -  3.25-3.375%
  • 5 YEAR ARMS -  3.0-3.50% depending on the lender

Ongoing Lock/Float Considerations

  • The prospect of the Fed reducing its asset purchases weighed heavy on interest rates for the 2nd half of 2013, causing volatility and generally pervasive upward movement.
  • Tapering ultimately happened on December 18th, 2013.  Markets had done so much to come to terms with it ahead of time that it essentially just confirmed the the 6 month move higher in rates, but didn't make for another immediate spike higher.
  • Rates moved gradually higher into the end of 2013 and began to move gradually lower into the beginning of 2014, helped along by a weak employment report on January 10th.  This report raised doubts as to whether or not the Fed would continue tapering asset purchases at the same pace, but it was ultimately a flare up in emerging markets and weakness in stocks that fueled bond-market positivity and allowed rates to hit 2014 lows on the same afternoon the Fed reduced asset purchases by another $10bln.
  • With that in mind, further interest rate resilience in the face of tapering only looks limited by ability of emerging markets and equities to continue being weak.
  • (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).