Mortgage rates had a far more tumultuous day despite ultimately hanging on to the lowest levels in more than 8 months.  Whether you wanted to be happy, sad, excited, or scared, there was something for everyone today.  The bond markets that underlie mortgage rate movement began the day in weaker shape (implying higher rates).  We'll never know if they would have been content to stay there because an important economic report sent bond yields and stock prices screaming lower at 10am.  Lenders who hadn't yet put out their first rate sheets of the day were able to open up at new 8-month lows.  Of the lenders who already had rate sheets out, most ended up publishing mid-day improvements within an hour or two.

Despite a gentle drift back in the wrong direction, it looked like rates were set to hold their ground at the new, lower levels.  Things changed in the afternoon as equities markets quickly recovered all of their losses for the day.  This is/was important because stock market weakness has been a feather in the cap of bond market strength and the mortgage rate rally.  Bonds couldn't help but weaken amid the stock surge.  Most of the lenders who had previously recalled rate sheets for a positive reprice now did so for negative reprices.  The net effect is very little movement from yesterday's latest levels, but perhaps another modicum of motivation to capitalize on these rates while they remain as low as they are.

So to recap, that's "higher, lower, higher" on the day to end in line with yesterday's levels or slightly better.  3.75% is the most prevalently-quoted conventional 30yr fixed rate with 3.625% being a runner up on top tier scenarios.

Loan Originator Perspective

"While our current trend towards lower rates remains intact, pricing did stagnate today and some lenders worsened their pricing mid-day.  I'm not surprised by this, given that Friday's jobs report can often be bonds' most influential data.  Short term, I locked several loans, enjoying the best pricing in months.  Long term, I still see far more economic issues than solutions, hopefully leading to stable, low rates!" -Ted Rood, Senior Originator

"Bond market rallies have been overly generous this year.  I can't see a reason to float outside of pure greed.  Old saying, " Pigs get fat, hogs get slaughtered"....I think locking in makes the most sense." -Constantine Floropoulos, VP, Quontic Bank

Today's Best-Execution Rates

  • 30YR FIXED - 3.625 - 3.75%
  • FHA/VA - 3.5%
  • 15 YEAR FIXED - 3.125
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • The Fed finally hiked on December 16th.  The baseline implication would be steady pressure toward higher interest rates, but there's been "a catch" so far in 2016
  • Global financial markets came into the new year in distress.  Major stock indices are plummeted around the world, and investors sought shelter in the bond market.  When investor demand for bonds increases, rates fall.

  • So we're left with much lower mortgage rates despite the Fed having just begun its hiking cycle.  This paradoxical trend can continue as long as global market turmoil fuels a demand for safer haven investments.  A big bounce in oil/stock prices could mean trouble for rates--at least temporarily.

  • 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).