We have a dilemma to deal with on this blog channel...
On one hand, we really don't want to present the complicated version of the mortgage rates equation: the secondary mortgage market(MBS). This would limit the size of our audience as many folks would get tied up in the technical particulars of the bond market. On the other hand we pride ourselves in presenting an accurate portrayal of what's really moving mortgage rates. In a normal economic environment, this problem is not difficult to work around. Bonds go up, stocks go down. Stocks go up, bonds go down. The explanation is easy. However this rates atmosphere is no where near normal. In fact, it's the total opposite, it's like nothing we've ever experienced.
The housing market is stagnating near record low levels of activity. Refinance loans account for the majority of loan production. Credit guidelines are as strict as they've ever been. Home values are distorted by excessive amounts of distressed inventory. And some regulations are up for interpretation while others are clear-cut black and white pains in the keister.
The one positive: Mortgage Rates are Showing No Sign of Rising
Sure there are day to day fluctuations, but consumer borrowing costs are generally holding at or setting new record lows on a week over week basis. Our rate updates sound something like this every day: "Mortgage rates improved on the open this morning. Treasury yields and MBS prices rallied throughout the day before closing slightly worse than their best levels of the session. This allowed some lenders to reprice for the better, erasing the weakness that affected loan pricing yesterday. Other lenders look to still be ignoring the ups and downs of MBS prices in the secondary market. Instead they choose to focus their rate pricing strategies on their ability to adequately accommodate and service new loan applicants. "
Sound familiar? That was today's recap...I bet I'll be able to use that same update again sometime in the near future.
The most aggressive 30 year fixed mortgage rates, conventional and FHA, remain in the 4.375% to 4.625% range. The "best execution" 30 year fixed rate mortgage is 4.375% plus one point for a very well-qualified borrower. If your loan pricing is subject to minimal "risk based" loan level pricing adjustments, a few lenders are offering 4.25% for less than two points at closing.
If you have a strong indication of how long you intend to mortgage your property, you may want to consider an ARM, as long as the fixed period is longer than 5 years. Otherwise I would steer clear of ARMS because fixed rate quotes are just too cheap! If you're currently paying "interest only" on your loan, congrats! You don't need to come off the fence just yet, rates should be low for some time. What we don't know is if they'll move any lower....
CAN MORTGAGE RATES GO ANY LOWER: READ MORE
Best Lock/Float Advice MND Can Offer Consumers: READ MORE
The "best executed" lock/float strategy comes down to finding an originator who knows the loan market, studies underwriting guidelines, and just plain old gets the J.O.B done. You have to let the loan officer earn their commission. That's how you "ride the float boat" in this environment...make sure you have a damn good skipper. Plain and Simple.