October 31, 2012
Mortgage rates were all over the board on Wednesday in terms of their movements relative to each other and trading levels in the Secondary Mortgage Market. Some lenders were priced slightly weaker while a few were notably stronger, but none of them so far off from yesterday's rates as to suggest a change in the prevailing conventional best-execution rate of 3.375%. (Read More:What is A Best-Execution Mortgage Rate?).
Typically, it's the prices of mortgage-backed-securities (MBS) that have the most influence on the day-to-day movements in interest rates and the costs associated with those rates (because it's less common for the actual quote interest rates to change on any given day, while it is almost always the case that the closing costs associated with that rate will be changing). And while some lenders did indeed offer better pricing today, in line with the improvements in MBS, there was certainly an uncommon level of disconnection.
In part, this is a symptom of markets having been closed yesterday and most of Monday. With today being the last day of the month, it has created a sort of crunch-time for lenders to conduct October's business. Additionally, we have the important Employment Situation Report coming up on Friday and mortgage rates tend to err on the conservative side heading into the report.
Loan Originator Perspectives
"I feel today would be a good day to lock up loans. Friday's jobs data can definitely move the market, but with rates at this level there is much more room for a move higher in rates than lower. And the election is right around the corner and who knows what impact that might have on rates. MBS are at their best levels in quite some time. If your lender repriced better, i would lock if within 30 days. If your lender doesn't reprice, you might still consider locking but definitely lock up before Friday. " -Victor Burek, Benchmark Mortgage.
Ongoing Lock/Float Considerations
- Rates and costs continue to operate near all time best levels
- Rates could easily move higher or lower, but given the nearness to all time lows, there's generally more risk than reward regarding floating
- This will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn't always mean they're done improving.
- (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario. There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).