December 20, 2012
Mortgage rates were virtually unchanged on Thursday, continuing to operate in slightly better territory than the multi-month highs seen on Tuesday. That said, a combination of uncertainty in markets and varying approaches to year-end pricing strategies (or necessities) has been leading to bigger divergences in rate offerings between lenders. With today being mostly flat overall, that means that some lenders moved higher with others moving lower. 3.375% Continues to be the most prevalent Best-Execution level for 30yr fixed, conventional loans.
(Read More:What is A Best-Execution Mortgage Rate?)
The market movements that underpin the day to day changes in mortgage rates generally conveyed a sense of uncertainty and waiting as the busiest morning of economic reports failed to inspire momentum in either direction. The best guess on the source of that uncertainty is the ongoing debate over the Fiscal Cliff, which continued to produce completely inconsequential headlines today. This follows a stretch of several days heading into Tuesday night where the tone seemed to be improving, but the past two days of headlines have fallen right back into that routine of political posturing which doesn't seem to be benefiting either political party and certainly not the American people.
The Fiscal Cliff has been built up to such an extent that it just isn't safe to bet too strongly on one outcome versus another as far as financial markets are concerned. That's been especially true for domestic bond markets, of which MBS (the mortgage-backed-securities that most directly influence mortgage rates) are prominent part. It's not a good time to be aggressively hoping for improved rates. While that's certainly not impossible, risks outweigh rewards until we see how markets respond to the next meaningful influx of Fiscal Cliff news.
Loan Originator Perspectives
"We are still locking at application and will continue to do so until at least year end and maybe beyond if there is no fiscal cliff resolution." -Alan Craft Loan Officer at AcopiaHome Loans.
"Just locked two in, pricing improved since yesterday as political posturing continues on Capital Hill. Philly Fed data was surprisingly strong today (which ordinarily would hurt rates), but the current focus isn't the economy it's fiscal uncertainty and Fed MBS purchases. May want to watch the market closely tomorrow in advance of the holiday weekend as most lock desks prefer to minimize their exposure when markets are closed." -Ted Rood, Senior Originator, Wintrust Mortgage.
"Lender pricing has improved overnight, so if floating has made you sea sick, lock in the modest gains. My advice is to float if you are closing in January. I feel we have put a bottom in and rates will either hold steady or improve from here." -Victor Burek, Open 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, but uncertainty surrounding the Fiscal Cliff is applying upward pressure.
- 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).