June 29, 2016
Mortgage rates roughly unchanged today, on average, with some lenders showing slight improvements while others moved just a bit higher. Even on individual lenders' rate sheets there were some cases of the lowest rate offerings improving while higher rate offerings got worse. This refers to the "cost" associated with any given rate. It's a behind-the-scenes number that dictates the value of upfront closing costs or lender credit. In most cases, the actual interest rate doesn't move on any given day, and instead, it's the upfront costs that allow for fine-tuning adjustments.
In terms of actual interest rates, quite a few lenders continue to offer 3.375% on top tier conventional 30yr fixed quotes. It's sharing roughly equal territory with 3.5% in that regard, but there are a few aggressive lenders down at 3.25%.
In general, this particular move to long-term lows has had impressive staying power. We've been waiting for one small sign that the momentum might be waning and there's a chance it showed up late this afternoon with bond market weakness that probably won't end up being reflected on most lender rate sheets. In other words, if you've been floating, waiting for that first sign of weakness, we've seen it now. That doesn't necessarily mean the weakness will continue, but it is the first "lock cue" we've seen since Brexit. More aggressive folks with a bigger tolerance for losses would be justified in waiting until after the 3-day weekend to see how next month's rate environment shapes up.
Loan Originator Perspective
"Rates continue to hold in our recent tight range. I do not see a big need to lock here, but I also do not see a big reason to float. If you are happy with your current pricing, nothing wrong with locking based on today's rate sheets. As always, rates rise much faster than they fall." -Victor Burek, Churchill Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 3.375-3.5%
- FHA/VA - 3.25%
- 15 YEAR FIXED - 2.75%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- Markets had been primarily concerned with the timing of the Fed's second rate hike (after they first hiked in December 2015)
- The possibility that the U.K. would vote to exit the European Union (Brexit) has since taken over as the biggest flashpoint for markets.
- The Fed freely admits it didn't hike in June because of this and because it wants to be sure that jobs numbers aren't taking a bigger turn for the worse. Mortgage rates moved farther into 3-year lows as a result.
- Brexit happened and rates rejoiced. Lock if you like what you see. The longer term trend remains positive regardless, but periodic corrections toward higher rates continue to be a risk.
- 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).