Mortgage rates touched all-time lows on Tuesday and Wednesday this week. Although these quotes were not widespread, lenders were seen offering mortgage rates below 4.25% for a brief time. We heard reports of quotes going as low as 3.875%.
As the week progressed and more borrowers locked in their mortgage rates, MBS prices fell from the range highs and lenders were forced to reprice for the worse. This pushed consumer borrowing costs higher, starting on Wednesday afternoon. While we did see a modest bounce on Thursday, which extended over into Friday, mortgage rates ended the week just above the record lows we witnessed on Tuesday and Wednesday morning.
This puts the best par 30 year fixed mortgage rates back in a range between 4.25% and 4.500% for well-qualified consumers. There are still a few lenders willing to go down to 4.125% but this quote will cost consumers more at the closing table.The best par 15 year mortgage rates are in a range between 3.625% and 3.875%. Loan originators will only be able to offer these rates to borrowers who have perfect credit profiles and enough equity in their home to qualify for a refinance. 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 a riskier investment.
While we do not yet see a reason to believe mortgage rates will dip below the record lows offered by lenders this week, we do expect the uncertain economic environment and the potential for Federal Reserve quantitative easing to keep mortgage rates in a very aggressive range for an extended period.
If you are a consumer looking to refinance your loan, we recommened you submit a loan application as soon as possible. This will ensure you are capable of locking in your borrowing costs if mortgage rates touch record lows again. Remember these below market quotes have only been offered for a short period of time, so you must be ready to lock when lenders push rates to record lows.
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.
Enjoy your weekend.