Mortgages rates are unchanged to slightly higher today.  The change is so minimal that for all intents and purposes, you might as well consider rates "unchanged."  This is a rather remarkable accomplishment considering tomorrow's Jobs report because it means that, on average, rates have held their narrowest range between any two Jobs reports since we started keeping track.  Despite that flatness, Best-Execution rates for 30yr Fixed Conventional loans eased down from 4.0% to 3.875% during that time, and that's where we sit again today.  This is also the lowest stable Best-Execution rate we've recorded (read more about Best-Execution calculations). 

It feels like we've harped on the high-risk nature of tomorrow's Jobs report (NFP) ad nauseam.  You can see the various iterations of that harping in commentary from yesterday and beyond, but the key points are these:

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  • NFP is not a guarantee of big movement, but as far as economic events go, it has as much potential to move rates markets as anything.
  • Rates have been at all-time lows in terms of Best-Execution and the costs for those rates have been near all-time lows.
  • Rates have approached and bounced higher from current levels several times now without breaking lower.
  • Tomorrow's report could cause rates to improve if the report is weak, but probably not as fast as a strong report could cause rates to deteriorate.
Whatever the case and however you're approaching tomorrow, we have little else to say about it apart from what's been said.  Because of this sense of repetition, we're working hard to bring new voices from the mortgage origination community into this commentary.  Let us know what you think.

Originator Perspectives:

Jason York, Vice President of VA Operations at Prime Mortgage Lending, Inc:  Locking the day before NFP is always a tough decision, unless there is some outlying information giving you a pretty good idea of where it will land.  On those short term deals, where you and the customer are content with where you are at, it's never a bad decision to lock in those terms. With our recent range, I am more apt to float the longer term deals, as even if NFP comes in better then expected, we shouldn't vary too much, and should continue to stay in our recent trading range, which gives you time to recoup those losses.  If the safe answer is to lock, then lock and don't look back! 

Alan Craft, Loan Officer at Integrity Home Loan of Central Florida: I always approach NFP with an extra degree of caution.  At some point a number is going to come in that will have a significant impact on rates.  It may be this week, it may be later in the year. Noone knows when. Either way I advise my clients to lock pre NFP if closing within 30 days.

Thomas Quann, Stonegate Mortgage Associates, Inc:  In my opinion, we are talking about rates that are at 60 year lows.  I think the benefit of floating is outweighed by the benefit of obtaining a rate in the 3's, lock in your savings now!  I guess the best way to put it is it worth losing a $300 per month savings if rates were to go higher to improve the savings to $315 per month?  My answer is NO,lock in now if you can!

Bob Van Gilder, Broker - Finance One Mortgage:  Tomorrow's NFP number has the potential to move rates. But, c'mon, if you are locked don't worry about it. If rates move down an eighth you save  8 cents per thousand borrowed. If you like what you are being quoted- lock it. Locking is the easiest part of the process.

Andy Pada at 1st 2nd Mortgage Co:  Tomorrow is a high risk day with no commensurate high reward.  Period.  Lock in.

Ted Rood, Senior Mortgage Consultant at Wintrust Bank:  Tomorrow's NFP already has diminished expectations due to the (frequently incorrect) ADP survey released Wednesday, but that being said, the market mover these days is Europe and their crisis d'jour.  The US economy is "less bad," and thus gets a lot of attention by default.  While I am personally inclined to lock (to avoid redisclosing and for client peace of mind), I do not anticipate tomorrow's release will significantly change rates regardless of the #.  The benefit to floating is the ability to eventually lock for 15 or 30 days (with better pricing), compared with longer periods earlier in the loan process.  If you have decent risk tolerance, you can benefit even if rates stay flat just by locking for a shorter period of time. 

Mike Owens, HorizonFinancial, Inc:  This has been repeated many times I am sure, but  " would you rather lock and rates go down or not lock and rates go up".   

 

Today's BEST-EXECUTION Rates 

  • 30YR FIXED -  3.875%
  • FHA/VA -3.75%
  • 15 YEAR FIXED -  3.125-3.25%
  • 5 YEAR ARMS -  2.625-3. 25% depending on the lender


Ongoing Lock/Float Considerations 

  • Rates and costs continue to operate near all time best levels
  • Current levels have experienced increasing resistance in improving much from here
  • Rates could easily move higher or lower, but given the nearness to all time lows, there's generally more risk than reward regarding floating
  • But that will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn't always mean they're done improving.
  • (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).