Mortgage Rates moved slightly higher again today, but the amount of the change from lender to lender depends on whether or not they released a negative reprice yesterday afternoon. Despite the rise, rates continue to operate in a fairly narrow range resting on all-time lows. Whereas 3.625% was probably as viable a Best-Execution rate as 3.75%, the latter is slightly more prevalent today.
(Read More:What is A Best-Execution Mortgage Rate?)
Like yesterday, today was choppy and volatile for markets. Unlike yesterday, which started in negative territory for rates and improved as the day progressed, today was the opposite, with bond markets starting out near the stronger levels achieved yesterday, only to give all yesterday's gains back by the end of the day.
Markets are nervous about an unprecedented concentration of market-defining events taking place over the next 7 days. These include the Greek elections on Sunday, an EU Summit over the weekend, the FOMC policy announcement next week and the lowest yielding 10yr Treasury auction in history tomorrow (it should be the lowest unless there's massive market movement in the next 24 hours).
Though there are many more bits and pieces creating risk and uncertainty in the coming days, these "biggies" are more than enough to cause the volatility, and for lack of a better term, "weirdness" that we're seeing in markets over the past two days. Big moves are at stake and although there's no mathematical or logical reason to believe markets will move one way vs the other, the SIZE of the risks make floating very dangerous in this environment. Again, it's not that floating wouldn't pay off here, or couldn't, but particularly with respect to floating over the weekend, we could just as easily wake up to 4.0%+ Best-Execution rates on Monday as we could 3.5%, not to mention that things could go right back in the other direction after the FOMC Announcement!
Long Term Guidance: We'd continue to advocate not trying to "get ahead" of current market movements as a high degree of uncertainty is pervasive. While it's a reasonably safe assumption that European concerns will generally help rates stay lower than they otherwise would be, that "otherwise would be" part is very much a moving target. Best bet is to focus on the fact that rates are at their all time lows, and can change quickly based on events that aren't "scheduled" or able to be forecast. Risk vs reward for floating vs locking looks a bit larger than we'd like, but not out of the question for those who understand the risks and have an exit strategy if things don't go their way.
Loan Originator Perspective With Rates At All Time Lows
Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage
We've had concerns about lenders processing capacity in the past, and today is no exception. Wells Fargo announced they'll no longer accept non-Wells FHA streamline loans from brokers, likely due to concerns over their processing times. Rates are great, will continue to be, but lenders are going have longer turn times as volume increases. If you want a loan, get going on it now!
Matt Hodges,Loan Officer, Presidential Mortgage Group
Lock em up! No sense in playing in this market. Too much volatility leads to losing rate or rebate back to the borrower. If you are closing in 30 days, lock it up!
Ira Selwin, Vice President of Secondary Marketing, US Mortgage Corporation
I still am aboard the lock boat. If your rate is available, I would recommend locking...Too much economic news can go against you, and you don't want to lose out.
Jason Zimmer - President, Parlay Mortgage & Property
With interest rates as low as they are, I suggest to my clients to lock their loan if they plan on closing within 60 days. No sense (pun intended) to be penny wise and pound foolish.
Aaron Meyer, Mortgage Officer, First Bank Financial Centre
I am having a very serious conversation with my clients about the extreme unknown of economic impacts the following 7-10 days has in store and how it might impact mortgage rates for the next 30+ days. I am asking them to ask "if rates go up will I regret locking in today?"
Today's BEST-EXECUTION Rates
- 30YR FIXED - 3.75%
- FHA/VA -3.75%
- 15 YEAR FIXED - 3.125 edging down to 3.00%
- 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).