Mortgage rates were in line with the best levels in 8 months as of last Friday.  Although they moved slightly higher to begin the new week, today is still the 2nd best day in the past 8 months.  Lenders continue quoting conventional 30yr fixed rates of 3.75% for the most part with 3.625% being the next most prevalent rate.  

In general, rates are taking cues from the big picture economic considerations and global financial market turmoil.  Low oil prices and volatile stock markets have been helping.  Most of the more focused economic data has been falling short of its usual potential to move markets.  An exception will certainly be made for this Friday's Employment Situation report, which is the most important economic report of any given month.  In the bigger picture, the trend toward lower rates continues, but any day that rates bounce slightly higher (like today) can mark the end of that trend.

Loan Originator Perspective

"Bonds lost some ground today, while still remaining near 6 month highs.  My rate sheets only worsened slightly.  The benchmark 10 year Treasury yield remained below 2%, but showed no desire to drop further.  There was more tepid economic data, both domestic and foreign, which is bond friendly.  I did take the opportunity to lock several more loans, while still carefully floating those far from closing.  If you are floating, have a defined game plan with your originator if rates rise.  This is NFP week, and as Friday nears, lenders' pricing can become more conservative." -Ted Rood, Senior Originator

Today's Best-Execution Rates

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

Ongoing Lock/Float Considerations

  • The Fed finally hiked on December 16th.  The baseline implication would be steady pressure toward higher interest rates, but there's been "a catch" so far in 2016
  • Global financial markets came into the new year in distress.  Major stock indices are plummeted around the world, and investors sought shelter in the bond market.  When investor demand for bonds increases, rates fall.

  • So we're left with much lower mortgage rates despite the Fed having just begun its hiking cycle.  This paradoxical trend can continue as long as global market turmoil fuels a demand for safer haven investments.  A big bounce in oil/stock prices could mean trouble for rates--at least temporarily.

  • 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).