Mortgage Rates continued avoiding drama today, moving moderately lower as bond markets held on to gains that followed yesterday's Fed Minutes.  As we discussed yesterday, the Fed didn't say anything earth-shattering, but some investors were prepared for more clues about rate hikes in the near term.  When those clues didn't show up, rates were able to come back down just slightly.

Rates first improved in the secondary markets and Treasuries.  When markets move in the afternoon--especially if that movement is just barely enough for a lender to consider changing rates--lenders will often wait until the following morning to make the adjustment.  This was the case today as most lenders were in better territory right from the start.  The improvement isn't enough to change actual interest rates, which remain in a range of 3.375-3.5% on conventional 30yr fixed quotes.  But today's closing costs would be slightly lower compared to yesterday's.  

Loan Originator Perspectives

We didn't get quite the move down that I would like to see. Seems that bond traders are a bit less bullish than we would like. I'm looking to lock in most loans with a 30 day window to close at this point.   -Constantine Floropoulos, VP, The Federal Savings Bank

As I hoped yesterday, bonds did post moderate gains today, moving back towards the middle of our recent rate range.  Keep in mind these daily moves have been minor, perhaps 10-20 bps, which typically translates into increased lender credits, NOT lower rates.  Our big news for the week (FOMC Minutes) has already been digested.  It's likely rates will stay stable, at least until next week's annual economic summit at Jackson Hole.  Float/lock?  Limited risk/limited reward at this point. -Ted Rood, Senior Originator

Today's Best-Execution Rates

  • 30YR FIXED - 3.375 - 3.5%
  • FHA/VA - 3.0 - 3.25%
  • 15 YEAR FIXED - 2.75%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • In the biggest of pictures, "global growth concerns" remain the driving force behind the long-term trend toward lower rates
  • Amid that trend, periodic corrections toward higher rates can and will happen.  These can happen for no apparent reason, or they can be brought on by changes in expectations surrounding central bank policy at home and abroad, as well as geopolitical and systemic risks

  • Time horizon and risk tolerance are 2 variables to consider when it comes to locking.  If you have plenty of time and don't mind losing some ground, set a limit as to how much higher rates could go before you'd lock to avoid further losses, and then float in the hopes of never seeing that limit.
  • In the shorter-term, it's always good to look for lock opportunities after rates have been moving lower or sideways repeatedly, especially if they've since begun to move back up in any sort of consistent way. 
  • 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).