The movements of mortgage rates higher and lower throughout the week have become progressively more tame. There was almost an entire point of difference between the highs and lows on Monday, whereas today's range has held within a mere quarter of a point.
That's the good news as it implies the QEII bond market cleansing process is in its final stages. The bad news is that even though the movements were tame compared to earlier in the week, rates still traveled in the wrong direction.
Reason? When MBS prices move down precipitously, lenders tend to reprice for the worse more aggressively and more quickly than they would reprice for the better on improved MBS prices. Because the rally we discussed yesterday occurred late in the day moving into the close, and was maintained into this morning, it painted a more stable picture for lenders--one in which they didn't need to respond to a precipitous price change. All that to say that even though we've seen prices move down a bit today, the net effect is mortgage-backed securities (MBS) ended the week largely where they began and the best conventional/FHA/VA 30 year fixed mortgage rates remain in the 4.25% to 4.50% range for well-qualified borrowers. The best conventional/FHA/VA 15 year fixed mortgage rates are in a range between 3.500% and 3.875%.
Important Mortgage Rate Disclaimer: Loan originators will only be able to offer these rates on agency conforming loan amounts to borrowers who are 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 recordation + escrows (things like upfront MIP (if required), property taxes, homeowners insurance, accrued interest)
And although I know it may sound like a broken record at this point... VOLATILITY WAS THE NAME OF THE GAME THIS WEEK! But for today, we'll leave it there and skip right to the picture of said volatility.
And while it may seem like a good thing that the range is becoming more stable, this is the sort of pattern that can sometimes be seen in price movements right before they make a big movement in one direction or the other. So again... Volatility PERSISTS. Not a time to be taking significant risks with the shortened holiday week ahead and another round of Treasury debt auctions. Things could still get worse before they get better, but we do expect rates to get better once the QEII cleansing process is complete.