April 4, 2016
Mortgage rates stayed steady today, beginning the first full week of April right in line with the lowest levels in roughly 6 weeks, depending on the lender. Most are offering conventional 30yr fixed quotes at 3.625% on top tier scenarios, with a few lenders an eighth of a percent higher or lower.
There were no significant economic events today and very little movement in the bond markets that underly mortgage rates. In fact, the level of volatility has been steadily decreasing since last week's speech from Fed Chair Yellen (which kicked off the most recent run of good luck for rates). This can occasionally be the prelude to a bounce, but it's more often a consolidation before continuing in the same direction. To say nothing of probabilities, there is simply some breathing room for rates to move higher without ending the broader downtrend that's been in place since mid-March.
Loan Originator Perspective
"It appears that floating over the weekend has paid off with slightly better rate sheets. Hopefully this is the beginning of a new trend pointing toward lower rates. With 1.80 holding on the 10 year note, I see very little risk to floating." -Victor Burek, Churchill Mortgage
"After the weekend allowing secondary markets to digest what went on last week and Friday’s NFP rates look pretty good today. And today’s sideways action is a decent sign, in my opinion. Where do we go from here? If you’re closing in the next few weeks rates are near the 2016 best levels, so locking makes sense. If closing in a longer time frame, maybe see what happens with an eye on the market and a conversation with your loan officer." -Jeff Anderson, Loan Officer, Salem Five Mortgage, LLC
"After a week of solid price gains it certainly makes some sense to lock in and protect those gains right now and especially if your loan is closing within 30 days or less. Sentiment seems to be drifting towards the lower inflation outlook which may certainly keep rates subdued so floating longer term closing times is certainly not too risky at this point. Keep glued in to the markets and your loan officer, however, as things can change quickly." -Hugh W. Page, Mortgage Banker, Seacoast Bank
Today's Best-Execution Rates
- 30YR FIXED - 3.625
- 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 began to rise somewhat sharply in March as market panic subsided and as the Fed signaled it would probably still hike rates in 2016--just not as quickly as anticipated.
- It remains to be seen whether markets can continue to move in this risk-friendly direction (read: bad for rates, good for stocks). Stocks have yet to break out of a gradual downtrend that began in mid-2015. If they do, it could keep pressure on rates to continue higher.
- We HAD been leaning toward locking since March 1st, which has proved to be a very solid strategy, but began to reconsider starting the 3rd week of the month. We've been more open to the idea of floating since then, as long as you're setting a stop-loss level somewhere overhead, meaning you'd lock to avoid further losses if markets move against you.
- 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).