December 10, 2012
Mortgage rates are very slightly lower today compared to Friday's latest offerings. However, Friday's rates were the highest of the week after the stronger-than-expected jobs report gave a boost to stocks and did some damage to bond markets. With rates able to hold their ground today, Best-Execution rates for 30yr Fixed, Conventional loans remain in transit between 3.375% and 3.25% depending on the lender and scenario.
(Read More:What is A Best-Execution Mortgage Rate?)
Markets started the week off at a leisurely pace without much movement in stocks or bonds relative to Friday's range. There was no relevant economic data to motivate market movements and only a few headlines regarding the Fiscal Cliff that seemed to catch anyone's attention. In general, markets are waiting for more important news, both in a general sense regarding the Fiscal Cliff as well as specific news on Wednesday afternoon which brings the Fed's policy announcement.
It used to be that FOMC Announcements were most interesting to markets when there was a chance that the Federal Funds Rate could be changing. But in the current era of modern economic history, we're very far past the issue of merely lowering the Funds rate. It's been at the "0-0.25%" range since December 2008 and isn't likely to change any time soon. With the increased level of transparency in Fed communications, the considerations are broader.
For instance, markets are generally assuming that the Fed will do something to extend the recent policy of purchasing longer-maturity Treasuries, but are simply waiting for the details. If the Fed simply allows the Treasury buying program to expire (unlikely), interest rates would very likely rise, including mortgage rates due to their interdependence with Treasuries (though mortgage rates likely wouldn't rise as much as Treasuries in this case). If they unveil a palatable extension to the Treasury buying program, Treasury rates could fall a bit further. While this could have a moderately beneficial impact on mortgage rates, here too, Treasuries would change the most with mortgage rates more likely to move in smaller magnitude.
Loan Originator Perspectives
"I'm going to sound like a broken record, but floating never makes sense to me and locking is the only thing I advise clients to do. Way too much risk of movement up to be sitting on the sidelines. Rates always jump quickly. If you're floating and you can't get your loan officer on the phone quickly, you will cost yourself. You might not even know it before it's too late. " -Mike Owens, Partner with Horizon Financial, Inc.
Today's Best-Execution Rates
- 30YR FIXED - 3.25% - 3.375%
- 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).