December 12, 2012
Mortgage rates are higher on average after today's monetary policy announcement from the Federal Reserve. Some lenders adjusted rates higher in the afternoon while others remain on their first rate sheet of the day. That has made for a bit of stratification in rate offerings between lenders and depending where one looks, rates might not be much different from yesterday (and in rarer cases are in better territory). Best-Execution remains split between 3.25% and 3.375%.
(Read More:What is A Best-Execution Mortgage Rate?)
Both stocks and bond markets sold-off today as the Fed ditched their previous policy verbiage that specified low Federal Funds rates through late 2015 and instead adopted threshold levels for unemployment and inflation. Essentially, this turned a firm target into a moving target and Bernanke reinforced this uncertainty during his press conference in saying that the thresholds themselves would not necessarily guarantee a change in policy.
In other words, the Fed is no longer specifying exactly how long they plan on low rates, and while they are tying policy changes to benchmarks, they won't necessarily change policy when those benchmarks are hit. Even if this ambiguity is a necessary evolution in the way the Fed communicates its policy, markets didn't like it much today. When bond markets sell off, it means that prices are falling and yields (or interest rates) are rising. The mortgage-backed-securities (MBS) that most directly influence mortgage rates tend to move in concert with broader bond markets and today was no exception.
All that having been said, the damage wasn't overly severe and does very little to change the recent landscape of mortgage rates. Granted, it could end up being the first step in a bigger change if it acts in concert with Fiscal Cliff headlines that continue a painful path for bond markets, but just like we can now say for the Fed, those headlines don't operate on a set schedule.
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).