July 1, 2015
Mortgage rates gave up recently-enjoyed gains today. This brings them to the week's highest levels (and the 3rd highest in 2015) a day before the all-important Employment Situation Report. Also referred to as "the jobs report" or simply "nonfarm payrolls," this is the most important piece of economic data released each month in terms of potential to move interest rates. If job growth is stronger than expected, rates usually rise. The farther away the actual number is from forecasts, the more markets usually move. Tomorrow is no exception despite several other important considerations ahead.
One consideration that's hard to miss these days is Greece. The country goes to a referendum this weekend in order to vote on 'something.' No one is abundantly clear on what that 'something' is, but the general idea is that it's about whether or not Greece will agree to Eurozone reforms (required in order to prolong Greece's bailout and keep it in the Eurozone). It SOUNDS like a big deal if you hear or see news on the topic, but tomorrow morning's jobs data could have a much greater impact. It's still way too risky to assume that the move higher in rates during 2015 has topped out.
Loan Originator Perspective
"Mortgage rates worsened today, as we continue to stay within a very tight range and looking for some greater direction as to whether rates will continue their overall trend higher or start to move lower. Until there is some clarity, locking continues to be the safest and likely best option." -Brent Borcherding, brentborcherding.com
"Simply put, there is too much risk out there to be gambling on interest rates unless Las Vegas Casinos happen to be your favorite places to hang out and you can afford to lose your bet. For all other folks, I believe locking your rate as soon as you are able to makes the most sense." -Hugh W. Page, Mortgage Banker, SeacoastBank
Today's Best-Execution Rates
- 30YR FIXED - 4.125%-4.25%
- FHA/VA - 3.75-4.0
- 15 YEAR FIXED - 3.375%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- 2015 began with a strong move to the lowest rates seen since May 2013. The catalyst was Europe and the introduction of European quantitative easing.
- It's a highly uncertain time for global financial markets. There is much debate over whether or not the global economy is turning a corner, thus justifying a widespread move to higher rates. That's made 2015 significantly more volatile than 2014 for markets. This means lender rate sheets may change appreciably from day to day, and sometimes even several times in the same day.
- Bottom line: European Quantitative Easing helped push global rates to all-time lows in April. Now, the big risk for mortgage rate watchers is that we might have turned a long term corner. That risk is being compounded by speculation about the Federal Reserve raising rates by the end of 2015.
- May and June have amounted to the 2nd major move higher bounce so far this year. Every time this happens, we have to consider the possibility that this will be a big-picture, long-lasting correction. Until such a thing can be ruled out, Locking makes far more sense.
- As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.' Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy. It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).