It was a mixed day for mortgage rates.
Loan pricing was initially improved over the rate/point quotes lenders were offering on Friday, however about halfway through the day the bond market pulled a complete 180 and MBS prices plummeted. This forced many lenders to reprice for the worse which erased early morning loan pricing improvements. At the end of the day mortgage rates are essentially unchanged vs. what lenders were quoting on Friday, but closing costs are slightly higher. For consumers who did not see changes in their rate/point quote structure today, watch out tomorrow. If the bond market extends the weakness it displayed this afternoon, your cost increases will likely be a bit steeper vs. those who experienced cost increases today.
The best par 30 year fixed mortgage rates remain in the 4.00% to 4.25% range for well qualified consumers. Rates below 4.00% are available but the closing costs/points structure is only advantageous to borrowers who intend to keep their mortgage for at least the next 5 years, otherwise paying points to float down your note rate is not worth the additional closing costs (ask your loan officer for a breakeven analysis). If you're seeking a shorter term mortgage loan, the best par 15 year rates are in the 3.375% to 3.625% range.
Mortgage Rate Disclaimer : Loan originators will only be able to offer the lowest conventional and government (FHA/VA) mortgage rates if the terms of your loan do not trigger risk-based loan level pricing adjustments (LLPAs). 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. (eg. credit scores under 720 and investment properties)
The bond market continues to demonstrate a clear unwillingness to push interest rates any lower without hearing new guidance from the Federal Reserve regarding their Quantitative Easing plans. With exception to a few periods of increased lender competitiveness over the past two months, the best 30 year fixed mortgage rates have generally held steady in a range between 4.00% and 4.25% for well-qualified borrowers. The best par 30 year fixed mortgage rates are not expected to exit this range ahead of November 3 when the FOMC releases their monetary policy statement.
This post shares background on Quantitative Easing: Mortgage Rates in Limbo. Waiting on Quantitative Easing
This post shares lock/float guidance for borrowers closing before or after November 3, 2010 (the next FOMC meeting): How Low Might Mortgage Rates Go After QEII? What if QEII Disappoints?
If you are a consumer looking to refinance your loan, we recommend 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 or begin to rise unexpectedly. It also allows the loan originator to alert you to potential barriers to closing you might face in the qualification process, which would be helpful in determining the appropriate rate lock period.