February 13, 2014
Mortgage rates fell moderately following this morning's weaker-than-expected report on Retail Sales. There were several other considerations that helped rates catch a break today, but this was the most prominent. With the exception of yesterday, today's rates are in line with the highs of the month. The most prevalently quoted conforming 30yr fixed rate for the very best borrower scenarios (best-execution) remains at 4.375%. When adjusted for day to day changes in closing costs, rates fell an equivalent of 0.04% today.
Yesterday, we discussed a shift in momentum for rates heading into February and that today would be crucial in confirming or rejecting that momentum. The result is that we were left with the lesser of two evils. Had the economic data been stronger, it not only would have made today more challenging, but would also have contributed in a negative way to longer term analysis of rate movement. Instead, today keeps hope alive that we can avoid such a fast-paced return to higher rates seen in December and January, but admittedly doesn't do much to argue for a move in the other direction. In several ways, it's a 'push' to tomorrow's economic data.
Loan Originator Perspectives
"If you were hoping for lower rates, the economic data went your way today. After yesterday's rough day and reprices for the worse, I am seeing better rate sheets this morning but it appears that lenders haven't passed along all the gains. I would float over night but be prepared to lock early. Tomorrow's most important report is the Consumer Sentiment report and most lenders will release initial rate sheets before that report hits the wires. If consumers are more optimistic, rates should worsen, if they are less optimistic, rates should improve." -Victor Burek, Open Mortgage
"Rates improved following weak retail sales and weekly jobless claims. No complaints there, but it still feels like we're just treading water. If the last two months' poor jobs reports weren't enough to convince the market it's facing economic headwinds, not sure what will. For now, locking early still seems like the smart move." -Ted Rood, Senior Mortgage Planner, Wintrust Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.375%
- FHA/VA - 4.0%
- 15 YEAR FIXED - 3.375-3.5%
- 5 YEAR ARMS - 3.0-3.50% depending on the lender
Ongoing Lock/Float Considerations
- The prospect of the Fed reducing its asset purchases weighed heavy on interest rates for the 2nd half of 2013, causing volatility and generally pervasive upward movement.
- Tapering ultimately happened on December 18th, 2013. Markets had done so much to come to terms with it ahead of time that it essentially just confirmed the the 6 month move higher in rates, but didn't make for another immediate spike higher.
- Rates moved gradually higher into the end of 2013 and began to move gradually lower into the beginning of 2014, helped along by a weak employment report on January 10th. This report raised doubts as to whether or not the Fed would continue tapering asset purchases at the same pace, but it was ultimately a flare up in emerging markets and weakness in stocks that fueled bond-market positivity and allowed rates to hit 2014 lows on the same afternoon the Fed reduced asset purchases by another $10bln.
- Rates got an ostensible push lower from weakness in stocks and emerging markets. As soon as those moves ran their course, the rate rally bottomed out as well. Now we're tentatively waiting for the next move.
- (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario. There are many reasons a quoted rate may differ from 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).