January 29, 2013
Mortgage rates began the day much improved compared to Monday's latest offerings, but the gains mostly evaporated by the end of the session. The mortgage-backed-securities (MBS) that most directly affect rates, had been steadily improving since sustaining major damage from Friday through Monday morning. Those improvements carried through to this morning's rate sheet print times, but trading levels began to deteriorate shortly thereafter. Stock prices and Treasury yields rose. MBS fell (falling prices mean rising rates), and throughout the course of the day, most lenders recalled rate sheets for negative reprices. The result is a 30yr Fixed Best-Execution level that remains at 3.625% with a few lenders still marginally lower in costs vs yesterday.
(Get Caught Up With Friday's Big Moves)
(What is A Best-Execution Mortgage Rate?)
In terms of this week's events that are likely to inspire market volatility, today was the lightest day of the bunch, with only Consumer Confidence as a potential market-mover this morning. The report was much weaker than expected--something that would normally cause rates and stock prices to fall, but not today. While the initial reaction unfolded as expected, it's a testament to the current market sentiment (the one lifting stocks and interest rates) that S&P's rallied to another 5yr high and 10yr yields crept over 2% again. One of the two big-ticket events for the week hits tomorrow afternoon with the FOMC Announcement. Along with Friday's Jobs report, this carries the biggest risk of volatility of the week. This can work for or against us, and we the "against" potential is big enough to keep us defensive. That will continue to be the case until/unless the longer term trend higher in rates of late is sufficiently broken. We'll start talking about that when it's a remote possibility.
Loan Originator Perspectives
"Ground we gained late yesterday is a distant memory at the moment, as the equities rally continues. Sure seems as if a LOT of economic uncertainty is being ignored as of late in the MBS market, but it is what it is. If you've locked, good for you. If you're floating, hold on tight and hope for either a bad jobs report on Friday or some surprising Fed speak on Wednesday." -Ted Rood, Senior Originator, Wintrust Mortgage.
Today's Best-Execution Rates
- 30YR FIXED - 3.625%
- FHA/VA - 3.25% - 3.5% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED - 2.875%- 3.00%
- 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).