Yesterday was one of those "GOOD NEWS/BAD NEWS" sorta days.
The good news was mortgage rates ended a damaging 5 day losing streak The bad news was the bleeding had only just stopped. We weren't recovering. Still, at the end of the day there was a positive perspective to be taken away. "Stop the bleeding" was a required pre-cursor to the "first real chance for notable improvements" that we hoped to see today.
Unfortunately those improvements did not come. We got close but lost positive progress before the day was done. Lenders repriced for the worse. That erased yesterday's teeny-tiny bit of betterness (is that a word?).
This is a setback for those in need of a rapid turnaround in "Best Execution" mortgage rates. Not a major one. Not yet at least. And we're still a few more bad days away from another major setback.
Potentially a move 0.25% to 0.375% higher in "Best Execution" Mortgage Rates.
We describe it as being on a ledge. It's gonna take at least one or two more good shoves before we're totally thrown over that ledge and rates jump another 0.25 to 0.375%.
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%.
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.
OUR PREVIOUS GUIDANCE: We stopped the bleeding today. This was a required pre-cursor to the "real chance for notable improvement" we are hoping for tomorrow.
NEW GUIDANCE: Minimal damage was done today. The bleeding is still stopped. While we're not yet in all-out "rates are going higher at least for the next 30 days" mode, there is a high risk the bleeding will resume. And once the bleeding begins, you will have one or two days at most to make a decision. There still exists a 50/50 chance that rates will improve over the coming days. But you better pay extra close attention to the market because we're definitely on a ledge.
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.