Lenders repriced for the better yesterday afternoon following a late day sell-off in stock markets which pushed mortgage-backed security prices to new record highs. Once new rate sheets were distributed, loan officers were able to offer the most aggressive pricing of the year to borrowers who had not yet locked-in their mortgage rate. At the end of the day, most mortgage investors were offering well-qualified consumers 4.5% rates on conventional 30 year fixed loans.
No new headline economic reports were released today. The only event on the schedule was the first of three Treasury auctions.
At 1pm, the Treasury Department announced the results of the $36 billion 3-year note auction. Strong, stable demand for our nation’s debt is one of several factors that have attributed to record low mortgage rates. Today's auction went well and the bond market rallied after the results were released. However the gains seen in MBS pricing were not large enough to warrant improved loan pricing. That's no big deal though, lenders didn't worsen rate sheets this morning and mortgage rates are sitting at their best levels of the year. READ MORE
The par 30 year conventional rate mortgage remains in the 4.50% to 4.75% range for well qualified consumers. To secure a par interest rate on a conventional mortgage you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee. If you are seeking a 15 year term, you should expect par in the 4.00% to 4.25% range with similar costs but lower FICO score requirements.
Although it it's very tempting to float your rate in this environment, I find it difficult to turn my nose up at this loan pricing. Lenders are not being shy about offering the most aggressive rates of the year as they need to get as much new business in the door and locked now just in case mortgage rates move higher in the day's to come. The only loans I recommend floating are those that can be locked on a shorter commitment period in the next few days. (Short lock terms offer better pricing. 15 days is generally as short as lenders will go but some do offer 7 day locks). If you are floating in hopes of mortgage rates declining a few more basis points, keep an eye on stocks. If stocks rally, mortgage rates will be pressured higher.