November 8, 2012
Mortgage rates held their ground for the most part, though some lenders were slightly weaker when the day's first round of rate sheets came out this morning. The somewhat bumpy morning eventually leveled off into the afternoon before getting a significant dose of positivity from a well-received 30yr Bond Auction. As we often note, although US Treasuries are NOT directly linked to mortgage rates, they do tend to move in the same direction most of the time. The Mortgage-backed-securities that ARE directly linked with mortgage rates can ride the coat-tails of surging Treasury yields, and did so today.
This helped the general mortgage rate landscape shift from a rather lackluster morning to improved rates in the afternoon. Lenders typically don't plan to release more than one rate sheet each day, but when MBS move enough, lenders may "reprice" and send out revised rate sheets. The net effect of today's reprices brought the day-over-day change to roughly unchanged levels and in some cases, rates moved slightly lower. 3.375% remains the more likely Best-Execution rate, but 3.25% is viable in some scenarios for some lenders.
(Read More:What is A Best-Execution Mortgage Rate?).
We got the week's first semi-significant economic data this morning as well as what could have been an important press conference with the European Central Bank president Mario Draghi. None of the above ended up having much sway on trading levels, and the 30yr Auction in the afternoon clearly voiced the loudest support for bond markets and interest rates. That's the end of the auction cycle for this week, and though there will be some economic data tomorrow morning, none of them are reports that the market has been waiting eagerly to digest. Banks are closed on Monday in observance of Veteran's day.
Loan Originator Perspectives
"Rates are looking pretty good and are getting close to the all time low. Nothing like the status quo reaction to the re-elected administration to reinforce the going nowhere fast economy. No jobs, no growth, no rate increases." -Mike Owens, Partner, Horizon Financial, Inc.
"Lock em up. The 10 yr has traced to the bottom end of the range, MBS are at the highs, there is absolutely no reason to further speculate going into the weekend. Today's extension of yesterday's rally allowed for the confirmation of the recent movement in the market and thus the incentive was passed onto rate sheets helping borrowers and pipeline managers alike. The market may continue to improve, but based on where we are at now and what would be needed for another leg down in rates, realistically floating would be idiotic." -Constantine Floropoulos, Quontic Bank.
"We're locking all purchase loans for clients who are in contract, and locking all refis for clients who are ready. These are the dips that borrowers ignore (or complacently shop) at their own risk." -Julian Hebron, Branch Manager, Loan Agent, RPM Mortgage.
"Rates are looking good. Prices are up. No need to wait...he who hesitates is lost." -Bob Van Gilder (BVG) Finance One Mortgage.
Today's Best-Execution Rates
- 30YR FIXED -3.375%, 3.25% creepin'
- FHA/VA - 3.25% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED - 2.875% - 2.75%
- 5 YEAR ARMS - 2.625-3.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates and costs continue to operate near all time best levels
- Rates could easily move higher or lower, but given the nearness to all time lows, there's generally more risk than reward regarding floating
- This will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn't always mean they're done improving.
- (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario. There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).