Mortgage rates bounced higher today, after 2 solid days of improvement.  In the bigger picture, rates are still closer to the lowest levels of the past month, but it's worth mentioning that the range is incredibly narrow over that time.  Most lenders have been quoting either 3.375% or 3.5% on top tier conventional 30yr fixed scenarios. Today's increase acted to reject a potential break below the range as it wouldn't have taken much more improvement to see more 3.25% quotes showing up.  

Bottom line, we're back to waiting on the range to be broken.  It could take weeks at the pace we're going, but would not likely take longer.  Reason being: markets will almost certainly come away from Janet Yellen's August 26th speech at Jackson hole with a clearer sense of Fed rate hike potential heading into the end of the year.  In the shorter term, rates will need significant motivation to break the range.  Tomorrow's Retail Sales data can definitely cause rate movement, but it probably isn't up to the task of acting as the aforementioned "significant motivation."  That said, there's limited impetus to float if rates aren't going to demonstrate a clear urge to move lower.

Loan Originator Perspective

Bond markets returned yesterday's gains today.  Fortunately, morning pricing improved from Wednesday's, though most lenders issued 2nd sets of rates as MBS losses built mid day.  Pricing is still well within recent ranges, we're talking about fairly small changes here, in the 25-40 bps range.  I don't think today represents the best, or worst, pricing we'll see in the next two weeks.  Short term floating (for now) means minimal risk and minimal reward.  With that in mind, not sure it's worth floating most loans. -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).