Mortgage rates rose today for most lenders, albeit modestly. In fact, several lenders were unchanged from Friday's latest levels with the rest seeing varying degrees of weakness. In almost all cases, the weakness would be seen in the form of higher closing costs or lower lender credit (as opposed to the actual contract rate being higher). The most prevalently-quoted conventional 30yr fixed note rate continues to be 4.0% on top tier scenarios, though there are more than a few lenders at 4.125%.
The week of Thanksgiving is often marked by serendipitous volatility for the bond markets that underlie mortgage rate movement. Wednesday tends to be the most abrupt day, but Tuesday is frequently involved as well. Through the years, Thanksgiving volatility has been both a blessing and a curse for mortgage rates on a short term basis. On the occasions where market conditions have suggested a bigger drop in rates, lenders have tended to be cautious in terms of how much improvement they pass through on rate sheets. In other words, lenders tend to hold back to some extent, because they know things could get bumpy. While this does insulate borrowers who float from some of the associated risk, rates could easily still worsen if there's enough movement in bond markets.
Loan Originator Perspective
"After a weak opening, MBS are following treasuries to their best levels of the day. As of 2pm eastern, only a couple lenders have passed along the improving pricing. With support not to far away, and month end quickly approaching which is usually good for bonds, I would continue to float and evaluate pricing in the morning." -Victor Burek, Churchill Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.0%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.25%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- 2015 has been largely about rates rising unevenly from a long-term low brought about by the onset of quantitative easing in Europe. In May and June, the Fed increasingly began telegraphing a 2015 rate hike. At that point, the "rising rate environment" seemed like a sure thing, but the Fed's plans hit several snags. Economic data began deteriorating at home and abroad, causing markets to rethink the higher rate rhetoric. Mortgage rates hit 6 month lows at the end of October, just as the Fed surprisingly changed it's policy statement to specifically suggest December as a rate hike possibility (something they haven't done since 1999).
- In the bigger picture, rates had been at a crossroads, trying to determine if they would move back to 2015 highs or if the late summer swoon was merely the first wave
of a longer campaign.
- While there is still plenty of room to be concerned about increasingly weak global economic growth,
that's not a solid enough reason to float in this environment. With the Fed almost certainly on track for a December rate hike, there is much more risk that rates move quickly higher vs
quickly lower. The big picture global malaise can serve as the basis for long term hope, but in the short term, assume upward pressure on rates when formulating your strategy.
- As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.' Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy. It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).