November 2, 2012
Mortgage rates were slightly higher in some cases but generally held up surprisingly well after today's Employment Situation Report showed a higher-than-expected amount of job creation in October. Trading in the secondary mortgage market was negatively affected at first, but bounced back throughout the day. Many lenders are in line with yesterday's rate sheets. Others moved slightly higher with the morning's first rate sheets and have not yet released a revised rate sheet this afternoon. The result is a fairly mixed day for rates, but one that didn't see enough movement to change the 3.375% 30yr Fixed, Best-Execution level for Conventional loans.
Given the amount of movement that the Employment report can create and even the initial market reaction this morning, rates markets have done an admirable job of holding their ground through all manner of circumstances this week. Although we don't always see big-ticket economic events move rates as much as they can, we'd reiterate that today's response was surprising. We generally hesitate to read much significance into elections and markets, but next week's election is the only other "biggie" on the horizon.
Whether it's the election or a combination of other factors, the conclusion is the same. A high degree of uncertainty continues to pervade the mortgage rate outlook. We have been and probably continue to be feeling more defensive about further increases in rates than we are optimistic about near term decreases. That said, even if markets are merely able to hold steady into Monday, there is some additional room for small improvements in mortgage rates due to this morning's rates being relatively more conservative as they followed fairly soon after the stronger Jobs report.
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).