December 18, 2012
Mortgage rates moved higher at the quickest pace in weeks on Tuesday as politicians convey an increasing sense of compromise regarding Fiscal Cliff negotiations. The broader move higher in rates had been somewhat gentler until today, beginning with the jobs report on December 7th. From there, the changes in Fed policy convey last Wednesday kept the pressure on, but it wasn't until yesterday and today that a shift in tone on the Fiscal Cliff pushed the 30yr Fixed "Best-Execution" level firmly into 3.375% territory, with some more conservatively priced lenders at 3.5%.
(Read More:What is A Best-Execution Mortgage Rate?)
Yesterday, we noted a "general, pervasive weakness" due to weekend's Fiscal Cliff evolutions. While today's weakness can also be largely attributed to The Cliff, it was specifically following Congressman Cantor saying a vote on the GOP's Tax Plan "could come this week" that sent bond markets into a tail-spin. We also noted yesterday that MBS (the "mortgage backed securities" that most directly influence lenders' rates) were generally more even-keeled than Treasuries and broader bond markets recently. That continued to be the case today, but the secondary mortgage market was only able to take so much abuse before prices began to slip and lenders began releasing negatively revised rate sheets in the afternoon.
Loan Originator Perspectives
"I think that locking has been the wise move for weeks. (always actually) We are lucky rates aren't worse. Waiting for a drop may be fruitful, but it could also be February before it happens. Lock and be happy. The fiscal cliff resolution will hurt short term. How long the short term is anyone's guess. A few days or somtime 1Q next year. I hope rates stay low and feel they will since there are no jobs and no growth.
" -Mike Owens, Partner with Horizon Financial, Inc..
"Rates on the march upward today as progress is perceived on fiscal cliff. It's impotant to put these movements in perspective. Rates may be near highs for last month or so, but still lower than virtually entire last several decades. Get it while the gettings good!" -Ted Rood, Senior Originator, Wintrust Mortgage.
Today's Best-Execution Rates
- 30YR FIXED - 3.375-3.5%
- 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, but uncertainty surrounding the Fiscal Cliff is applying upward pressure.
- 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).