Mortgage rates, true to recent form, can't catch a break.  Just when we think we might be seeing a glimmer of hope, we're treated to several days of painfully higher rates.  Of course, all of this is playing out over a fairly narrow range.  Indeed, today's movement is better measured in closing costs as opposed to actual contract rates.  Lenders continue quoting conventional 30yr fixed rates of 4.125% for top tier scenarios, but today's closing costs would be higher than yesterday's. Some lenders moved back up to 4.25% today.

Despite the narrow range and the fact that "low 4's" are historically low rates, consumers seeking mortgages are not amused.  Even when the only day-over-day change is in closing costs, a move like today's can mean that a borrower seeking a $300k loan is now looking at another $1200 in closing costs, simply because they held off on locking (or were unable to lock) yesterday. 

Making matters more frustrating is the fact that 2015 has been an incessantly volatile year for rates.  Even during past periods where rates have risen more overall, we generally saw a more concerted movement in one direction as opposed to the big moves higher and lower that have characterized the past few months.  Volatility costs lenders too.  It's created an environment where underlying market improvements have resulted in smaller corresponding improvements in rate sheets compared to historical averages.  At the same time, when underlying markets deteriorate, lenders are quicker and more aggressive when it comes to adjusting rate sheets accordingly.  Elevator up, stairs down...

Loan Originator Perspective

"Nothing much has changed. It continues to be very risky to float in this environment. If you are hoping for rates to move lower, then we need the Greek deal to fall apart, or the Fed to become much more dovish on their rates hike outlook. We did have some morning weakness but bonds have rebounded so if you plan on locking look to do so toward the end of the day. " -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).