Mortgage rates moved moderately lower today as bond markets benefited from overseas risks. These risks take several forms at the moment, ranging from the risk of further economic deterioration in Europe to the geopolitical risks associated with several armed conflicts around the globe. In general, bond markets benefit (meaning rates move lower) in response to increased risk. Unfortunately for the secondary mortgage market, it's US Treasuries that see the lion's share of benefit from such periods of waxing risk, but mortgage rates have been able to tag along to some extent.
The most prevalently-quoted conforming 30yr fixed rate for flawless scenarios is now back to 4.125%, though 4.25% remains nearly as common. In general, MBS (the mortgage-backed-securities that govern rate changes) have been unwilling to return to late-May and late-June levels to the same extent as US Treasuries. As such, they've been holding in an excruciatingly narrow range just above the lows of the year.
Loan Originator Perspective
"Floating appears to still be the best option, day to day. With Europe
slowly dragging US rates lower and no significant data scheduled for
tomorrow, I think the odds strongly favor rates continuing lower or
remaining the same. There appears to be less risk toward higher rates,
day to day, right now." -Brent Borcherding, brentborcherding.com
"Global issues continue to help rates here and abroad. Today's pricing
is about the best we have seen in a couple weeks. Much of today's
gains came well after lenders issued their first rate sheets of the day.
If you lender has repriced better and you are within 10 days of
closing, you should consider locking. I favor floating everything else
to see if this move can continue. It sure seems the global issues,
except for in Palestine, are getting worse and show no signs of
resolution. " -Victor Burek, Open Mortgage
"Nice rally today in mortgage pricing and we're inching ever closer to a
convincing break below resistance that could help prolong this rally for
awhile potentially. I would like to see some additional follow through
on this improvement before I have more confidence in it. Given that, I
recommend short timers lock in these gains now and borrowers with
longer term closing times wait it out a little while longer but be wary.
Of course, no harm in locking here anyway if you have gains that you
don't want to risk. " -Hugh W. Page, Mortgage Banking Officer, Seacoast National Bank
"I believe for the next
week or so rates direction may be dictated by the direction of the stock
market along with the European market. If the markets decline rates
will head lower with them. If they start to rally you should consider
locking." -Manny Gomes, Branch Manager, Norcom Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.125-4.25
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.375%
- 5 YEAR ARMS - 3.0-3.50% depending on the lender
Ongoing Lock/Float Considerations
- The hallmark of 2014 so far has been a disconcertingly narrow range in rates. Too many market participants bet on rates going higher in 2014, and markets have punished that imbalance with a paradoxical move lower.
- As of June, rates were officially lower year-over-year, but that's due to rates' path higher in 2013. The current path in 2014 remains sideways.
- European markets continue to play a nagging role in the background, generally helping rates in the US remain lower than they otherwise might be.
- From a wider point of view, we're in limbo, waiting for the first significant move away from the narrow range. A rally into late May stood a chance to act as this break, but rates have since returned to what were previously the lower limits of the 2014 range.
- As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.' Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy. It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).