I hope everyone had a safe holiday weekend. U.S. markets were closed yesterday in honor of Independence Day. Banks did not issue rate sheets.
The week ahead is one day shorter and several economic releases lighter.
- MBA Applications Index (low impact)
- Weekly Jobless Claims (low to medium impact)
- The Treasury Department announces the terms of the 3-year, 10-year notes, and 30 year bond auctions scheduled for next week. (bigger impact next week)
- Wholesale Trade (low impact)
Not much in the way of scheduled data to move the markets this week...
Typically, in weeks like this, the bond market and mortgage rates take their directional guidance from the general sentiment of the market. Stock market sentiment is highly negative and low bond yields continue to reflect weak investor appetites for risky assets. This week is also a popular summer vacation timeslot, so investor participation will be below average. Because the scheduled release calendar is thin and many investors have moved to the sidelines, we do not expect a major shift in consumer borrowing costs this week. But we'll be watching closely just in case...
Consumer borrowing costs opened the week marginally higher but recovered from weakness this afternoon after the stock market sold off. The best par 30 year fixed mortgage rates remain in a range between 4.375% and 4.625% 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 3.875% to 4.125% range with similar costs but lower FICO score requirements.
Mortgage Rates are slightly higher than the all time lows set last week, but rates continue to hold near the best levels ever. I see very little to gain by floating so I continue to favor locking all loans closing in the next 30 days. In my personal pipeline, I have even locked a few clients on 45 day commitments to remove the risk of volatility.