Mortgage rates improved today following a slightly weaker reading on Retail Sales data this morning.  It seems that bond markets were waiting to rule out the possibility of stronger data. Reason being, the pace of the improvements was aggressive considering the fact that the Retail Sales report was very close to forecast levels.  Improvements in bond markets equate to rates moving lower.

Despite the quick move initially, bonds were unable to keep the rally going.  Mortgage-backed securities lost enough ground in the afternoon for several lenders to raise rates, but the net effect is still clearly positive compared to yesterday.  Most lenders had already been quoting conventional 30yr fixed rates of 3.75% for top tier scenarios and today's strength brought several down to 3.625%.  In cases where today's contract rate is the same as yesterday's, the improvement would be seen in the form of lower closing costs.
 

Loan Originator Perspective

"Rates caught a break today, and loan pricing improved across the board.  A loan I floated overnight picked up $900 more lender credit, and the borrower is a happy camper.  There weren't any definitive reasons for the gains, which leads me to wonder if they'll last.  My rate sheets are the best since April 3rd today, and I see this as a great locking opportunity.  If you're floating, better be ready to act fast, it will take serious motivation for rates to improve further." -Ted Rood, Senior Originator

"Nice rally today in the bond and MBS market following weaker than expected Retail Sales data.  Currently, the benchmark 10 year note has very solid resistance just below around 1.84 which it has been unable to break over the last couple months.  So we are currently at the bottom of our range which is a lock indicator.  I would recommend locking all loans closing within 30 days." -Victor Burek, Open Mortgage


Today's Best-Execution Rates

  • 30YR FIXED - 3.625-3.75%
  • FHA/VA - 3.25-3.5
  • 15 YEAR FIXED - 3.00-3.125
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender


Ongoing Lock/Float Considerations

  • 2015 began with a strong move to the lowest rates seen since May 2013.  The catalyst was Europe and the introduction of European quantitative easing.

  • With European QE having now begun, we're on high alert for a big picture bounce in European economic data, sentiment, growth, and rates.  The more it looks like such a bounce is taking hold, the greater the risk that domestic bond markets and mortgage rates will also experience a big bounce higher.  There was a possibility that the bounce occurred in February, but European bonds got back to the task of improving in March.  This has helped calm the domestic bond market's move toward higher rates.
  • It's a highly uncertain time for global financial markets.  On the one hand, some believe we're in the midst of a race among world central banks to devalue currencies and lower interest rates.  Others believe that the global economy is turning a corner and rates will grind higher.  That creates a lot of volatility, and volatility is bad for mortgage rates.  One result is that they have a slightly harder time keeping pace with movement in Treasuries.  That can be good or bad, depending on which way markets are moving.  The other result is that there really is no way to be sure that today's rates will be available a few hours from now.  They could get better or worse, but the point is that there's more change and movement in the mortgage market so far in 2015.

  • 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, conventional 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).