This is gonna be one of those "GOOD NEWS/BAD NEWS" sorta days.
The good news is...
- The mortgage rate losing streak has come to an end at 5 days. Celebrations are acceptable. Even if it's just a fist pump.
- Nervous tensions were moderately relieved in the secondary mortgage market today. We've backed away from a ledge. For now.
- Reprices for the better were reported today! (Repricing for the better = improved borrowing costs)
The bad news is....
- There was a 5 day losing streak in mortgage rates. Stopping the bleeding doesn't mean rally.
- Nervous tensions were only moderately relieved in the secondary mortgage market today. We're still very much on a dangerous ledge.
- Reprices for the better we're not all that helpful.......
The primary mortgage market is still very segmented at the moment because of a pending shift in the production mortgage-backed security coupon in the secondary mortgage market. Some lenders have already shifted while others are taking their time.
CURRENT MARKET: The "Best Execution" conventional 30 year fixed mortgage rate is STILL split between 5.125% and 5.25%. If you meet the requirements
outlined in the disclaimer below, you should still be able to execute a loan
commitment at 5.25% with lender credits. 5.125% is still available but not in every market across the country. The upfront cost of permanently buying down the rate from 5.125% may not be worth it to every
applicant. We would generally advise the permanent floatdown if you plan
to live in your house and pay your new mortgage for longer than the next 5 years. 5.00% is still out there
as well but will definitely require points paid at the closing table.
Ask your originator to run a breakeven analysis on any origination
points they might require for the permanent float down. On FHA/VA
30 year fixed "Best Execution" is priced between 4.875% and 5.00% with
the same comments above re: the split and closing cost credits. 15 year
fixed conventional loans are best priced between 4.25% and 4.375%. Five
year ARMS at 3.625-3.75%.
OUR PREVIOUS GUIDANCE: We do expect borrowing costs to rise before a sustainable recovery rally is considered in the secondary mortgage market. We anticipate the first real chance for notable improvements will be seen on Thursday.
NEW GUIDANCE: We stopped the bleeding today. This was a required pre-cursor to the "real chance for notable improvement" we are hoping for tomorrow.
What MUST be considered BEFORE one thinks about capitalizing on a rates recovery?
1. WHAT DO YOU NEED? Rates might not recover as much as you want/need.
2. WHEN DO YOU NEED IT BY? Rates might not recover as fast as you want/need.
3. HOW DO YOU HANDLE STRESS? Are you ready for MORE VOLATILITY in the bon
is the most 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 buydown 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 intense fiscal frisking that comes along with the underwriting process.