November 20, 2012
Mortgage rates started out the day mixed but mostly lower as lenders passed along market improvements from late in yesterday's session. Mid-morning headlines about a potential ceasefire in the Middle East along with news that Eurozone finance ministers were making progress on releasing bailout funds to Greece both served to send interest rates higher in financial markets. The market volatility ultimately prompted several lenders to release negatively revised rate sheets, making for a net increase in rates/costs on the day, but one that doesn't alter the prevailing 3.375% Best-Execution level for 30yr Fixed, Conventional Loans.
Although markets haven't been keen to respond much to the limited amount of economic data so far this week, tomorrow offers the busiest line-up so far. Despite the reasonably flat interest rate situation over the past several weeks, there's plenty of room for volatile movements inside that broader range. Volatility is especially possible on weeks such as this where markets will be closed a day and a half for the Thanksgiving holiday.
Reminder: While all mortgage lenders will be closed on Thursday, some will also remain closed on Friday. If you're considering locking a loan this week, you should check with your lender to determine whether or not they will be accepting locks on Friday, assuming you don't decide to lock before then.
(Read More:What is A Best-Execution Mortgage Rate?)
Loan Originator Perspectives
"Monday I said we'd be floating refinance loans into Monday 11/26 unless rates dropped materially. Today rates opened materially better for certain client profiles, which was unexpected since key MBS coupons lenders use to price rates have generally dropped in price since yesterday (normally, rates rise when MBS prices drop and vice versa). This means some investors opened the day with better rates (despite MBS market signals) to generate pre-holiday lock volume, and we took the opportunity to lock rates on client profiles that did improve over yesterday. As for purchases, we also locked rates today for buyers who got into contract to buy homes over last weekend. Buyers still shopping for homes should also note that this is the time of year when you can get the best deals because competing buyers are distracted by holidays and sellers get jittery. Just remember: if you get into contract to buy a home Wednesday night through Sunday, you'll have to wait to lock your rate until Monday 11/26 because banks will be closed. " -Julian Hebron, Branch Manager, RPM Mortgage.
"The risk/reward to floating has been very well illustrated over the last month or so. Those who were waiting for rates to go down are still waiting - with no benefit. With rates just above all time lows, it doesn't make a lot of sense to bank on rates continuing to fall. Only with the benefit of hindsight will we all know what the true bottom is/was." -Brett Boyke, Senior Mortgage Banker, Wintrust Mortgage.
"First and foremost, Happy Thanksgiving to all. On the rate front, we've seen predicable volatility as the fiscal cliff uncertainty commands attention. After yesterday's stock rally, it's quite possible that any resolution (even if it's kicking the can AGAIN) could lead to higher rates. Don't see huge swings in the works regardless, but if you like the rates today, START YOUR LOAN and/or lock the rate while the getting is good so you can get the ball rolling." -Ted Rood, Senior Originator, Wintrust Mortgage.
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% - 2.75%
- 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).