January 24, 2013
Mortgage rates bounced back from a few days of moderate improvements today. Lenders typically don't release their first rate sheets of the day until a few hours of the trading session have passed. If rates sheets would have arrived before this morning's economic data, rates likely would have logged slight incremental improvements. But today's Jobless Claims report showed far fewer Americans filed for unemployment benefits this week, sending bond markets into weaker territory before most lenders issued today's rates. This resulted in most lenders moving noticeably, but not catastrophically higher in terms of borrowing costs, while Best-Execution levels remained unchanged at 3.5% (some availability at 3.375%).
(Read More:What is A Best-Execution Mortgage Rate?)
Bond markets, including MBS (the 'mortgage-backed securities' that most directly influence mortgage rates) continued to move into weaker territory in the morning hours. During that time, stocks were moving higher along with interest rates (which tend to correlate more often than not). This has been especially true during earnings season as bond markets have taken cues from stocks on several occasions, though with less volatile emulations of the movement. Thankfully, that continued to be the case today as stocks came off their highs and brought bond markets back to better levels in the process. This prompted a few lenders to offer rate sheet adjustments in the afternoon, but day-over-day, rates remain higher.
Loan Originator Perspectives
"I was pleased today to pull up our rates and find the pricing better than yesterday by $500 on a client from yesterday. Was able to pay $2000 towards her closing costs rather than the $1500 we expected! The market has been up and down today, but not that many lender reprices yet. Bottom line: if the pricing works on a deal and my borrowers aren't gamblers, we're usually locking." -Ted Rood, Senior Originator, Wintrust Mortgage.
"Volatile day ultimately ending a bit worse than yesterday, which was also worse. The gentle upward trend that began as the year kicked off has resumed. Rate shoppers beware. " -Julian Hebron, Branch Manager, RPM Mortgage.
Today's Best-Execution Rates
- 30YR FIXED - 3.5%, 3.375% in isolated cases
- 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 have risen moderately from their all-time lows, making for relatively increased reward for floating at the expense of greater risks of loss.
- Rates could easily move higher or lower, and unscheduled, unexpected events can ultimately have the most say in the direction.
- Near term risks in 2013 include the upcoming debt-ceiling debate in Washington as well as the Fed's policy outlook regarding securities purchases.
- Prospects For Extending The Debt Ceiling Deadline currently seem to be preventing a move back down in rate. Passage of such legislation could further support a rising rate environment.
- (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).