The significant reversal in loan pricing that began after Friday's jobs report is starting to level off.  On average, the costs charged by lenders on "Best Execution" rate quotes moved slightly lower today, although "Best Execution" rates themselves are unchanged....

CURRENT MARKET*: The "Best Execution" conventional 30-year fixed mortgage rate is 4.625%. While this was the case last week, few lenders were readily quoting it.  More lenders were instead offering 4.75% (extra margin in rate sheets). But when taking into account loan pricing improvements awarded on Friday, yesterday and today,  a greater number of lenders are actively quoting 4.625%. Some are even offering 4.50% again (scattered reports).  On FHA/VA 30 year fixed "Best Execution"  is 4.375% and in some cases 4.25% is on the table. FHA quotes at 4.50% are widespread.  15 year fixed conventional loans are best priced at 3.75%. Five year ARMs are still best priced at 3.25% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE: There are two decidedly different tones between this week and last. Whereas markets seemed fixated on mostly jobs in in the holiday shortened work week behind, the one ahead offers many scheduled economic releases and events to trade around. And market sentiment isn't looking good as a new week packed with news gets underway (not good for stocks. good for bonds).  This implies a "flight to safety" could continue to benefit mortgage rates in the near-term.  Still, while the case for our outlook  ("lower rates by the end of the summer") remains intact, until we see investors display a commitment to rally, we will be reluctant to advise floating in the short-term, especially with unfriendly volatility only a few days behind us.  We would however be willing to float into tomorrow. Just to see if this situation plays out in favor of lower rates right now..

CURRENT GUIDANCE: Today was the first significant day of data for bond markets to digest this week.  And that went over fairly well with no major changes to bond prices in the secondary markets.  If you floated through Friday's Jobs report or are a first time reader as of yesterday, the chances of Best-Execution rates improving from 4.625% to 4.50% are better than the chances they'll rapidly evaporate to 4.75%.  Although this outlook can change very quickly, we're more open to the idea of floating than we have been recently.  We'd urge inclined floaters to pay careful attention to market movements for an unfriendly turn-around, but for now, there are a wide variety of scenarios that may be able to grab another .125% lower in rate while only risking increased closing costs if markets move against you.


BEWARE: MND guidance is speculative in nature. We don't have a crystal ball, we can't predict the future, we can only share our outlook. Making the following considerations extra important........................

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

*Best Execution is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.