April 25, 2016
Mortgage rates didn't move much, if at all, today. That's not exactly what we want to see right now considering they're as high as they've been since the 2nd half of March. The average lender has now moved up from quoting conventional 30yr fixed rates of 3.625% to 3.75% on top tier scenarios. Earlier this month, stronger lenders were as low as 3.5%.
With no meaningful motivation in terms of economic data or news, today's lack of mortgage rate movement isn't too surprising. Later this week, it will be very hard for rates to avoid motivation. The Fed's policy announcement comes out on Wednesday afternoon, and although they're not expected to hike rates at this meeting, many feel they'll use the venue to telegraph the next rate hike. Whether or not that happens, markets will likely react. In other words, there is potential volatility ahead for mortgage rates. Although volatility can take rates in either direction, the bigger risk at the moment is that the recent trend toward higher rates continues. Locking is a safer bet until this trend comes to an end.
Loan Originator Perspective
"Rates continue to drift higher. We have a ton of data and the Fed on deck this week. The trend is the trend until it isn't. Right now the trend is to higher rates, so locking in, especially short term closes would be prudent." -Victor Burek, Churchill Mortgage
"Bonds were largely unchanged today, and are near late March levels. I'd love to think we're preparing for an imminent rally, but can't say I believe that. Too much "non-bad" economic news hitting, too little global fiscal discord. I'm locking at application for most borrowers, my pricing hasn't suffered as much as bond movement would merit, time to get while the getting is good!" -Ted Rood, Senior Originator
Today's Best-Execution Rates
- 30YR FIXED - 3.75%
- FHA/VA - 3.25%-3.5%
- 15 YEAR FIXED - 3.00%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- The Fed finally hiked on December 16th, causing fears of rising rates in 2016, but markets began the new year with rates moving surprisingly lower. Major losses in stocks and oil prices were part of the same trend of investors moving away from risk.
- After bottoming out fairly close to all-time lows in February, rates have seen only brief episodes of volatility in a low, narrow range.
- Some of the forces that had been helping rates are now at risk of reversing course. Namely, stocks and oil have been trying to break higher and European bond markets bounced near all-time lows.
- We'd already switched to lock bias on April 12th due to the end of a downtrend in rates, but now we're now in a situation where rates may be embarking on a trend higher. Locking is a safer bet until such a move can be ruled out.
- 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).