January 7, 2013
Mortgage rates managed to catch their breath today after rising at the fastest pace since March on from Wednesday through Friday last week. Some lenders offered improved rate sheets on Friday afternoon, while others waited until today to pass along improvements. But in both cases, the bounce back represents only a small portion of the broader losses. Best-Execution for 30yr Fixed, Conventional loans had been firmly planted at 3.25% heading into December, and began to share the stage with 3.375% as the month progressed. By Friday, it had risen to 3.5% for a majority of lenders and remains there today, though some are back in 3.375% territory.
Read More:What is A Best-Execution Mortgage Rate?
Read More about Last Week's Rapid Rise in Rates
More than a resounding bounce back to lower rates, today's movement in underlying bond markets have been better characterized by "leveling off." There's an eerie sort of indecision that historically can act as the eye of the storm, or can set the stage for a stronger push back in the other direction. It's too soon to tell for now, and the level of market-moving events doesn't really pick up until the middle of the week. Rates could continue to rise, but their relatively elevated levels mean there's some more balance in considering locking vs floating today.
Loan Originator Perspectives
"Rate continued to stabilize today, and pricing has recovered much, if not most of the hit from Thursday's decline. If you could take emotion out of the picture, economic reality is no different today than last Wed. Can't ignore it, however. I look for rates to consolidate this week, with a new range established perhaps 60 bps above pricing from December." -Ted Rood, Senior Originator, Wintrust Mortgage.
Today's Best-Execution Rates
- 30YR FIXED - 3.375 - 3.5%
- 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.
- (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).