Mortgage rates had a wild ride today.  Underlying bond markets were significantly weaker leading up to the afternoon's Fed events.  During this time, many lenders sent out reprices with higher rates compared to yesterday's latest.  After the Fed Announcement was released (along with the updated forecasts from Fed members on where they saw rates over time), bond markets bounced back in a big way.  At that point, lenders began repricing in the other direction, ultimately bringing average rates below yesterday's latest levels.  By the end of the day, several lenders were quoting 4.0% on top tier conventional 30yr fixed scenarios for the first time since June 4th.  That said, the average lender remains at 4.125%, but with lower closing costs than yesterday.

The big question is whether this afternoon's strength or this morning's weakness is the more telling move.  Are rates more interested in going higher or lower?  Did the Fed change anything?  This is a particularly tough call this time around for two reasons.  Normally, if there's a big move on a Fed day, that suggests lasting momentum.  Unfortunately, today's big move went in both directions, so which one is telling the truth?  The other complicating factor is Europe, which has been doing as much as anything to push rates higher in May and June.  The bottom line is that we're in substantially similar territory to yesterday afternoon.  The game-plan is to remain defensive until the longer term trend definitively changes, and today wasn't enough to accomplish that.  Floating is still dangerous until it's not anymore.

Loan Originator Perspective

"Bond markets liked today's Fed Statement, but didn't "love" it. 90 minutes after its release, we've recouped earlier losses and surpassed Tuesday's closing levels, but may be running into resistance. As usual, the statement was fairly obtuse, and certainly left room for interpretation. At least we avoided an overly optimistic Fed outlook, the question now is whether we will remain range bound, or improve back to May's levels. I'll float overnight, but I'm not convinced this rally will get us to the rate levels buyers and loan officers hope to see." -Ted Rood, Senior Originator

"Leading up to the FOMC annoucement, rates took a hit and lenders repriced for the worse. Thanks to a more dovish dot plot of where Fed members see the Fed Fund rate at the end of 2015, 2016, just about all of this mornings losses have been recouped. As of about 3pm eastern time, only 2 lenders have been reported to have repriced for the better. If you floated into today, i would definitely continue floating overnight and evaluate your pricing in the morning when rates come out. " -Victor Burek, Open Mortgage

Today's Best-Execution Rates

  • 30YR FIXED - 4.125%
  • FHA/VA - 3.75
  • 15 YEAR FIXED - 3.25-3.375%
  • 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.

  • It's a highly uncertain time for global financial markets.  There is much debate over whether or not the global economy is turning a corner, thus justifying a widespread move to higher rates.  That's made 2015 significantly more volatile than 2014 for markets.  This means lender rate sheets may change appreciably from day to day, and sometimes even several times in the same day.
  • Bottom line: European Quantitative Easing helped push global rates to all-time lows in April.  Now, the big risk for mortgage rate watchers is that we might have turned a long term corner.  That risk is being compounded by speculation about the Federal Reserve raising rates by the end of 2015.

  • May and June have amounted to the 2nd major move higher bounce so far this year.  Every time this happens, we have to consider the possibility that this will be a big-picture, long-lasting correction.  Until such a thing can be ruled out, Locking makes far more sense. 

  • 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).