December 5, 2012
Mortgage rates were slightly lower again on Wednesday. Even though the day to day movements have been small, that gets us as close as we've been to the all-time lows seen in late September and early October, with a few exceptions depending on the lender. Best-Execution for Conventional 30yr Fixed Loans has arguably moved down to 3.25% at this point, though 3.375% is still prevalent depending on the lender and scenario.
US markets didn't do much at all by way of reacting to this morning's economic data, though the fact that it offered several negative employment anecdotes could be seen as a slight benefit for interest rates. To clarify, some of this morning's data contained weaker-than-expected readings on job creation. If that translates to weaker job creation in Friday's Employment Situation Report, it suggests a slowing economy which typically coincides with rates moving lower.
Rates are already quite low, of course, and markets are fairly preoccupied with broader issues such as Europe, Fed policy changes (or extensions of buying programs, as the case may be next week), and of course, the Fiscal Cliff. While weakness in Europe (due to a poorly received Spanish debt auction) started things off on a positive note for interest rates, the positivity continued as congressional leaders noted an absence of progress on the Fiscal Cliff. Later in the session, news circulated that "Republican defectors" were ready to support a compromise (read more), which reversed some of the previous market movements, but not sufficiently to prompt widespread negative reprices from lenders.
(Read More:What is A Best-Execution Mortgage Rate?)
Loan Originator Perspectives
"When clients want to float while rates are great, I always ask if they enjoy gambling. Most immediately answer no. That's when I remind them that just because pricing has improved doesn't mean it will continue to do so indefinitely. There's currently a huge dropoff on FHA/VA loans' pricing between 3.25% and 3.125%. Markets WON'T improve enough to make 3.125% cost effective, and pricing at 3.25% is awesome, so there is NO incentive to float. It's risk versus reward, and certainly more risk than reward today, even if rates do improve slightly as the week goes on." -Ted Rood, Senior Originator, Wintrust Mortgage.
Today's Best-Execution Rates
- 30YR FIXED - 3.25% - 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).