Mortgage rates moved lower today, following after the labor department reported lower-than-expected job creation in the month of April.  Interestingly enough, the bonds that underlie mortgage rates did not improve today.  Lenders were nonetheless able to offer noticeably improved rate sheets.  Part of the reason is the uncertainty and potential volatility associated with today's employment data.  There's always some chance it can send markets much higher or lower.  As such, lenders don't set rates as low as they can when that uncertainty is off the table.  

The other reason is that lenders simply haven't been keeping pace with the bond market while rates have been trading near long-term lows.  It's almost as if the rate sheets on any given day reflect the previous day's market movement.  Normally, lenders will adjust rate sheets on the day of the market movement itself.  Although market movement suggested higher rates versus yesterday, lenders still owed us some improvement from yesterday, and we got it!  Several lenders put out their best rate sheets since May 3rd, 2013.  

Loan Originator Perspective

"NFP was below the estimates, but overall not a horrible number.  We saw some profit taking which pushed rates a touch higher on treasuries.  Overall the momentum has been favorable, and today's number is not going to buck the trend.  I favor floating into the weekend." -Constantine Floropoulos, VP, The Federal Savings Bank

"Bonds actually regressed slightly today, despite a tepid jobs report.  My hunch is that bond traders anticipated the results, so "bought the rumor, then sold the news".  The fact we didn't post gains is worrisome, and may indicate we're nearing rates' short term lows.  I love writing loans at these levels, not so keen about floating when we're at risk of rates bouncing back up.  My pipeline is almost completely locked, and glad my clients don't have to worry about losing ground." -Ted Rood, Senior Originator

"I like locking short term closes here. If you are within 15 days of closing, strongly consider locking in the recent gains." -Victor Burek, Churchill Mortgage

Today's Best-Execution Rates

  • 30YR FIXED - 3.625%
  • FHA/VA - 3.25%-3.5%
  • 15 YEAR FIXED - 3.00%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • The Fed finally hiked on December 16th, causing fears of rising rates in 2016, but markets began the new year with rates moving surprisingly lower.  Major losses in stocks and oil prices were part of the same trend of investors moving away from risk.
  • After bottoming out fairly close to all-time lows in February, rates have seen only brief episodes of volatility in a low, narrow range.  

  • The Fed's most recent announcement at the end of April reinforced their cautious approach to rate hikes.  The last time that happened, stocks cheered, but this time they've been moving lower.  Bond markets like that, and they'll continue to like it until stocks prove they can break back above 2015 highs.
  • Even though the broader backdrop has taken a positive turn for rates, there are still tactical opportunities to lock.  In general, we look for any prolonged moves lower (i.e. 10 days in a row without moving higher) or any major low-rate milestones (i.e. 3-year lows).
  • 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).