Mortgage rates continued slightly higher today, further distancing themselves from last week's 1-yr lows. The average lender continues to quote conventional 30yr fixed rates of 3.625%, up from 3.5% during last week's better days, but there are quite a few lenders who are back up to 3.75%. Outside of last week, today's rates are right in line with the lowest levels in more than a year.
The modest amount of movement presents a bit of a curveball in assessing the longer-term trend. When rates fall as quickly as they have over the past 7 weeks, we can increasingly count on these sorts of bounces. On the occasions where the longer-term trend is over, the bounces typically maintain a certain upward momentum for several days. Today, by contrast, is definitely seeing upward momentum fade. As such, it's still too soon to confirm the end of 2016's impressive trend toward lower rates, The risk is that it's also too soon to say this is NOT just another day in that confirmation process.
Loan Originator Perspective
"Rates were largely unchanged today, but remained near recent lows. I'm in a "locking earlier" mode now, given how much ground my pricing picked up. I'd rather lock a little too soon than too late, given that current pricing is nearly the best in a year. There's nothing less appealing that calling clients to discuss how much their pricing worsened overnight, not fun for anyone." -Ted Rood, Senior Originator
Today's Best-Execution Rates
- 30YR FIXED - 3.625
- FHA/VA - 3.25-3.5%
- 15 YEAR FIXED - 3.00
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- The Fed finally hiked on December 16th, causing fears of rising rates in 2016.
- But global financial markets came into the new year in distress. Now markets aren't even convinced that we'll see another Fed rate hike in 2016. Major stock indices 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).