July 6, 2016
Mortgage rates fell again today, extending an already-uncanny winning streak to its 8th straight day. The most recent improvements bring the average lender right in line with all-time lows. In fact, a few lenders are now offering better rates than they've ever offered, and a vast majority are back to the same note rates quoted in late 2012 (average points are still slightly higher though).
Enough hair-splitting! The point is that rates are low! 3.25% continues to be widely available today and has taken further market share from 3.375% when it comes to conventional 30yr fixed quotes on flawless scenarios. With most scenarios not being perfectly flawless, there are still plenty of 3.375% quotes going out.
At the moment, the biggest risks to rates are rather immediate. First of all, there's the simple fact that rates are increasingly likely to bounce with each successive day of improvement. An 8-day streak is about as long as it gets, save for only a few occasions in the past decade. Now, that doesn't necessarily mean rates will continue to head higher after that bounce--simply that we're due a pause.
The other risk is that the next 2 days of economic data come in strong. Just today, the Fed reiterated that it held rates steady last month, in part, due to the weak jobs report. With that in mind, Friday's big jobs report has a chance to alter the Fed outlook for better or worse. If job growth is weaker than expected again, rates could only improve so quickly. But if job growth effectively addresses the Fed's concerns, we could see a somewhat abrupt adjustment toward higher rates.
Loan Originator Perspective
"If you floated over this weekend and through today, you should be seeing some nice rate sheets. With non farm payrolls hitting on Friday, I would not be surprised to see a small pull back ahead of this report. That said, I think it would be wise to lock in today, especially if closing in July." -Victor Burek, Churchill Mortgage
"Do you look a gift horse in the mouth? If you do then float on my friend. For those of you who do not, lock your rate. We’re in all time new low territory right now, at least as far as Treasury yields are concerned. Mortgage rates have been here once before but that was a long time ago. Long term I think rates get better from here but in the near future we could see a pull back for profit taking and you must not forget this Friday is NFP. If we get a good jobs number then I’d expect a very healthy dose of profit taking and a large pull back in rates." -Jason B. Anker, Vice President- Loan Officer at Salem Five
Today's Best-Execution Rates
- 30YR FIXED - 3.25-3.375%
- 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).