November 1, 2012
Mortgage rates were significantly more unified in their movement on Thursday. Actually, "lack of movement" would be a better characterization as most lenders are so close to yesterday's offerings as to be more appropriately considered "unchanged." Naturally then, Best-Execution remains steady at 3.375% though some borrowers would be better served at 3.25% or 3.5% depending on the lender and scenario (Read More:What is A Best-Execution Mortgage Rate?).
As we often note, Mortgage-Backed-Securities (MBS) are the primary drivers of mortgage rates when it comes to the "stuff" that trades on Wall Street. When the prices of MBS rise, rates tend to fall, and vice versa. It's worth noting that rates at many lenders held steady today in spite of the fact that MBS prices were lower at the start and moved incrementally lower throughout the day.
All in all, the movement was quite small and the fact that lenders were seen to be more conservatively priced into the end of October may have contributed to their ability to hold steadier against today's market weakness. The biggest potential market mover of the week arrives tomorrow in the form of The Employment Situation Report. This ALWAYS has the potential to cause a significant shift in mortgage rates depending on how closely reality matches estimates.
Loan Originator Perspectives
"Same advice as yesterday..floating is very risky. Not only do we have one of the most important data points printing tomorrow, non farm payrolls, but we also have the election right around the corner. I feel risk of floating is greater than any benefit..but who knows. Rates could go either way tomorrow no matter what the data says. My recommendation is to lock today and forget about it." -Victor Burek, Benchmark Mortgage.
"Lock your rate and eliminate the worry of what rates are going to do." -Mike Owens, Partner with Horizon Financial, Inc.
Today's Best-Execution Rates
- 30YR FIXED -3.375%
- FHA/VA - 3.25% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED - 2.875%
- 5 YEAR ARMS - 2.625-3.25% depending on the lender
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).