December 6, 2012
Mortgage rates were completely flat versus yesterday's offerings to begin the day but several lenders recalled rate sheets for negative revisions as markets deteriorated in the afternoon. MBS Prices (the "mortgage-backed-securities" that most directly influence mortgage rates) were in modestly positive territory for most of the day, but fell abruptly in the afternoon. When MBS prices move lower, it can prompt lenders to adjust rate sheet pricing lower as well, effectively raising interest rates. That said, the actual interest rate quoted for any given scenario isn't likely to have changed between yesterday and today, with the main difference being seen in slightly higher closing costs (or lower lender credit). Conventional 30yr Fixed Best-Execution rates remain in transit between 3.375% and 3.25%.
Tomorrow brings the always-important Employment Situation Report. Though there are many employment metrics published in any given month, this one is the most important and has the greatest potential to cause a reaction in financial markets. That said, the traditional level of market reaction may be relatively more muted than history would suggest. That doesn't mean that a stronger-than-expected report wouldn't still have a negative impact on rates... Certainly it could, but it does mean that the ongoing Fiscal Cliff debate and other supporting actors have served to make markets less eager to make big moves in either direction until the nature of its resolution (or lack thereof) becomes more clear.
(Read More:What is A Best-Execution Mortgage Rate?)
Loan Originator Perspectives
"Rates are great and with the jobs report tomorrow, I'm locking everything as always. Low expectations for the report could hurt us if there is a surprise to the upside. Low number is expected so I don't really see a rally to lower yields and rates." -Mike Owens, Partner with Horizon Financial, Inc.
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).