November 7, 2012
Although this can't be said for every lender, mortgage rates snapped immediately back to recent lows following the election results. The election's effect on rates was in the spotlight over the past 3 days with yesterday's rates rising severely as markets accounted for the possibility that current "interest-rate-friendly"administration could be unseated. As the election results gained clarity overnight, interest rates in broader bond markets were already declining. By the time the Secondary Mortgage Market opened up, MBS (the "mortgage-backed-securities" that most directly influence rates) were back to their best levels since mid-October.
As MBS move higher, mortgage rates tend to move lower, and that is indeed the case today. The improvements are primarily in the form of the COSTS associated with existing rates. In other words, most borrowers would be quoted the same rate today as yesterday, but with significantly lower closing costs. 3.375% remains as the Best-Execution Rate for conventional 30-yr fixed loans, but the improvements do increase the viability of 3.25% depending on the scenario and lender.
(Read More:What is A Best-Execution Mortgage Rate?).
In addition to reversing the election-related weakness, bond market have also benefited from renewed tensions in the Euro zone. There have been ample headlines adding to general uncertainty, weaker economic data, riots on the streets of Greece, and several important events to worry about in the upcoming days and weeks.
Loan Originator Perspectives
"Big rally today thanks to elections here and troubles overseas. Lenders passed along some improvement but definitely held some back. I would float everything overnight and allow lenders some time to pass along more of the gains." -Victor Burek, Benchmark 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).