Mortgage Rates moved slightly higher again today as the secondary mortgage market experienced one of its most volatile sessions since early June. Although the pace of the movements during the day was brisk, rates markets began the day in better territory, making for slightly improved rate sheets in the morning. The volatility was seen between 10am and 2pm when the MBS (mortgage-backed-securities) that most directly influence rates, moved from their highs of the day to their lowest levels in months, prompting most lenders to recall rate sheets and reprice with higher rates.
Those reprices solidified yesterday's move up to a 3.625% Best-Execution rate for 30yr Fixed, Conventional loans.
(Read More:What is A Best-Execution Mortgage Rate?)
Here's what we wrote yesterday, repeated verbatim as it is more applicable with each passing day of weakness:
Clearly, the trend toward higher rates continued today and has stampeded through each instance of "potential resilience" in the past two weeks. As to whether or not it continues, it doesn't make sense to try to predict where this market is going. If we look at the economic fundamentals, we can make a case that we should bounce back to slightly lower rates, but markets have traded with zero regard for those fundamentals on the way up to current rates. Best bet is to assume recent trends are intact until proven otherwise.
Long Term Guidance: We'd continue to advocate against trying to "get ahead" of current market movements due to the high degree of uncertainty. For those with lower levels of risk tolerance who would consider movements in cost (despite unchanged interest rates) to be significant, or for those within 15 days of closing, or who are purchasing, this certainly favors locking. We'd also consider that rates remain very close to all-time lows.
Loan Originator Perspectives
Ira Selwin, Vice President of Secondary Marketing
What do you have to lose by locking? Nothing. What do you have to lose by floating? A lot. The last few days demonstrate how quick things can move in the wrong direction. Unfortunately, if they do get better it won't be as quick. In the end, rates are still very low so hopefully you are still able to benefit with the increase.
Today's BEST-EXECUTION Rates
- 30YR FIXED - 3.625%
- FHA/VA - 3.5% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED - 2.875-3.00%
- 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).