Mortgage rates are sharply higher today, as global markets abandoned bond market holdings at the quickest pace of the week. When investors favor selling bonds vs buying, prices fall and yields--or interest rates--move higher. Even before the domestic trading session was underway, bond yields were much higher after Asian and European trading. This led to the secondary mortgage market starting the day off at the worst levels in over month.
Underlying markets attempted to bounce back from the weakness in the middle of the day but didn't even make it back to yesterday's worst levels before being pushed right back down. The net effect for mortgage rates was lender rate sheets in their worst territory in over a month and an increase in the prevailing Best-Execution rate (30yr Fixed, Conventional) from 3.375% to 3.5%.
Yesterday we noted the recently sideways momentum as a potential prelude to a sharper move in one direction or another. Although today's move in mortgage rates is the most abrupt of the week, it's not necessarily the sharp move we're worried about. If it comes, it could begin as early as tomorrow, following the 8:30am release of the initial GDP estimate for the third quarter, which is well before most lenders publish their first rate sheet of the day. That means that if GDP has a negative impact on rates, there wouldn't be an opportunity to react until after the damage was done.
Loan Originator Perspectives
"Your best defense is a great offense. If you have not locked, best bet is to lock. You can take that to the bank." -Bob Van Gilder, Finance One Mortgage.
"Lock while you can still get 3.375%. It's fading fast." -Mike Owens, Partner with Horizon Financial, Inc.
Today's Best-Execution Rates
- 30YR FIXED - 3.5%
- FHA/VA - 3.25% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED - 2.875%
- 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
- Rates could easily move higher or lower, but given the nearness to all time lows, there's generally more risk than reward regarding floating
- This 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).