Mortgage rates moved higher today after hitting the lowest levels in roughly 2 weeks last Friday.  Today's increase was fairly minimal in the big picture.  In fact, most of Today's quotes are essentially unchanged from Friday.  But there was some weakness in underlying bond markets that didn't make it through to lenders' rate sheets.  In other words, unless bond markets stage a rally overnight and tomorrow morning, tomorrow's rates will be higher.  

Last week, I mentioned that the more aggressive approach to locking/floating would be to wait until we had clear evidence that suggested the trend of recent improvement had ended before locking.  In assessing such trends, we can use certain key levels in bond markets.  The key level we've been following on MBS Live is 1.52% in 10yr Treasury yields, which is exactly where today ended.  More simply put, we're right on the edge of the danger zone.  

Loan Originator Perspective

Should be an interesting week culminating with the Employment Situation Report on Friday.  This months job's numbers will probably determine whether we get a rate hike this year or not.  Despite the small pull back this morning, bonds have broken into a new range and we have solid support overhead.  At this time, I favor floating all loans into tomorrow. -Victor Burek, Churchill Mortgage

Bond markets pulled back slightly, which was hardly a surprise after last week's strong rally and month end demand.  Treasuries are still well below our "line in the sand" yield of 1.52%, and as long as that's the case, I am not in a hurry to lock new loans.  This week's trading will be driven by Friday's NFP report.  May's was remarkably bad, June's was remarkably strong (yet rates held up well).  If you're floating now, and a gambler, float into Friday, you might draw a straight flush.  If you're more conservative, take the chips off the table by Thursday, put the money in your pocket, and don't look back. -Ted Rood, Senior Originator

Today's Best-Execution Rates

  • 30YR FIXED - 3.375-3.5%
  • FHA/VA - 3.25%
  • 15 YEAR FIXED - 2.75%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • In the biggest of pictures, "global growth concerns" remain the driving force behind the long-term trend toward lower rates
  • Amid that trend, periodic corrections toward higher rates can and will happen.  These can happen for no apparent reason, or they can be brought on by changes in expectations surrounding central bank policy at home and abroad, as well as geopolitical and systemic risks

  • Time horizon and risk tolerance are 2 variables to consider when it comes to locking.  If you have plenty of time and don't mind losing some ground, set a limit as to how much higher rates could go before you'd lock to avoid further losses, and then float in the hopes of never seeing that limit.
  • In the shorter-term, it's always good to look for lock opportunities after rates have been moving lower or sideways repeatedly, especially if they've since begun to move back up in any sort of consistent way. 
  • 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).