Mortgage rates are unchanged to slightly higher, after beginning the day in slightly better territory vs yesterday and weakening in to the afternoon hours.  As is occasionally the case, interest rates took cues from equities markets and the European currency.  Both of these advanced, especially in the afternoon, pulling domestic interest rates up with them, which resulted in deterioration for the secondary mortgage market and ultimately widespread revisions to morning rate sheets.  Best-execution for 30yr Fixed, Conventional Loans remains at 3.625% with recent improvements leaving 3.5% closer than 3.75% for most lenders. 

(What is A Best-Execution Mortgage Rate?

Fed Chairman Bernanke was back on Capitol Hill today, fielding questions from the House Financial Services Committee in his second day of semi-annual testimony.  Markets didn't pay much attention as the day was dominated by the equities rally which in hindsight, looks like it was lying in wait for the opening bell before taking off with utter ferocity.  Bond markets did a fairly good job of resisting this, but were ultimately forced to concede more territory in the afternoon. 

The risk to mortgage rates is that the sentiment over the Italian situation bottomed out earlier in the week and that Italy can somehow muddle through without the situation deteriorating as it did in 2011 (one of the driving forces behind declining mortgage rates in 2011, even if indirectly).  Bottom line, today's market activity suggests that yesterday was just a bit too soon to confirm a shift in trends due to Italian elections.

Loan Originator Perspectives

"A couple days of sideways trading and we're mildly unchanged day over day for rates. MBS could also be storing energy for a big movement." -Jeff Statz, Mortgage Advisor, Inlanta Mortgage.

"Very jittery pricing today, but the consensus is rates getting worse. Touched on .125% lower for certain client profiles yesterday but now we're back up .125%, which brings us to the level we'd been at since rates started rising off record lows January 15-16. The current rate level is .375% higher than record lows, so it's still quite favorable for borrowers, but the jump back up in rates after even the slightest dip yesterday proves that the general tone of MBS markets is one of caution and selling. Rate fence sitters beware." -Julian Hebron, Branch Manager, RPM Mortgage.

"It has been nauseating watching the volatility trying to identify significant fundamentals behind the movements in recent days. The reality is as confirmed by the majority within our community that you should have locked already. Today's move only reaffirms this as we are searching for reasons for the quick selloff in MBS. Friday may be a great day to float into, but the stakes are very high." -Constantine Floropoulos, Quontic Bank.

Today's Best-Execution Rates

  • 30YR FIXED - 3.625%
  • FHA/VA - 3.25% - 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 have risen moderately but consistently since hitting their all-time lows in September and October 2012.
  • Regardless of global or domestic economic weakness, the subsiding fear of a disorderly EU breakup will continue to prevent rates from getting back to those lows.
  • This is very likely to be the case unless a similarly panic-inducing event were to come into focus, or if a disorderly break-up regained the spotlight.
  • Sequestration, negative growth, and generally choppy political and economic environments around the world DO NOT constitute that sort of panic.
  • This is a "rising rate environment" until further notice, though pockets of recovery and consolidation can provide smaller-scale opportunities against the larger-scale backdrop.
  • (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).