April 18, 2013
Mortgage rates were unchanged today, with some lenders raising costs just slightly while others were markedly improved. Taken together, there was no change in the average borrowing cost associated with the current 3.5% best execution (what is this?) for 30yr Fixed loans. The discrepancies between lenders and the nearness to unchanged levels are products of a market that was both positive and negative for interest rates and MBS, the mortgage-backed-securities that most directly influence mortgage rates. Bond markets were weaker earlier in the day but made up ground just in time for most lenders to base their rate sheets on the stronger MBS levels. When there is a lot of movement in MBS between 9-1030am, it can create these moderate discrepancies between lenders.
Another aspect of the positive/negative movements in bond markets today is that it continues to support the "curveball" phenomenon that we mentioned yesterday. Bond markets and mortgage rates have reached levels where they either need to bounce back higher or break through into new lows for the year. The unchanged rates today mean that we've now gone two days without committing to either of those eventualities. The longer this continues, the more "pent-up" markets can become, making for a relatively faster-paced move higher or lower when the time finally comes.
Loan Originator Perspectives
"MBS hanging in today, with prices recovering from a slightly lower opening. The loans I've priced today have been a little better than yesterday, as we suspected they would be. We're still defining the lower range, and with inflation running below Fed targets, we should see some welcome stability in rates!" -Ted Rood, Senior Originator, Wintrust Mortgage
"Locking as they come in and are ready to go. Rates minimally better than yesterday, but pricing is good so don't take chances that are not necessary." -Mike Owens, Partner, Horizon Financial Inc.
"Interest rates on mortgages remain consumer friendly. You may not ( actually you won't) like the process, but you will enjoy the results!" -Bob Van Gilder, Finance One Mortgage.
Today's Best-Execution Rates
- 30YR FIXED - 3.5%
- FHA/VA - 3.25% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED - 2.75-2.875%
- 5 YEAR ARMS - 2.625-3.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates have risen moderately but consistently since hitting their all-time lows in September and October 2012.
- Regardless of global or domestic economic weakness, the subsiding fear of a disorderly EU breakup will continue to prevent rates from getting back to those lows.
- This is very likely to be the case unless a similarly panic-inducing event were to come into focus, or if a disorderly break-up regained the spotlight.
- Sequestration, negative growth, and generally choppy political and economic environments around the world DO NOT constitute that sort of panic.
- This is a "rising rate environment" until further notice, though pockets of recovery and consolidation can provide smaller-scale opportunities against the larger-scale backdrop.
- (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).