October 23, 2013
Mortgage rates fell again today, but at a gentler pace than yesterday, bringing them to new 4-month lows. With no meaningful economic data to influence rates, the positive momentum today was more of an epilogue to yesterday's main storyline. The Conforming 30yr Fixed rate (best-execution) itself, remained at 4.125%, with the improvement coming in the form of lower closing costs or higher lender credit, depending on the scenario.
Interest rates have clearly experienced an adjustment courtesy of jobs report, and the magnitude of the move is in line with the magnitude of the "miss" (in that we saw a good sized improvement in rates for a good-sized discrepancy between the actual jobs numbers and expectations). From here, the remaining economic data will offer fine-tuning adjustments, either helping the continue the trend lower in rates, or suggesting a broader leveling-off process before the next big jobs report (which is only two weeks away due to shutdown-related rescheduling).
Loan Originator Perspectives
"Rates continue to improve and in my opinion going to continue to improve
but there will be dips and peaks. If closing within 10 days, I would
recommend locking now as we have had a couple nice days and a pull back
isn't out of the question tomorrow. I think longer term closings should
continue to float and look to lock within 15 days since 15 day locks
offer the best pricing." -Victor Burek, Open Mortgage
"2.47 on the 10
YR US Treasury yield is the next major layer of resistance and should be carefully watched as an
indicator if this rally has more steam. Still floating, with a bit more confidence now." -Constantine Floropoulos, Quontic Bank
"Rates remain on their trudge downward. If you "missed the boat" earlier
in the year on a refinance, it may be time to stick your toes back in
the water. Rates are not where they were in April...yet. (and they may
not get there) But you still may be able to get rid of mortgage
insurance, take some cash out and lower your current rate or term. Those
in the purchase game will save $2.83/$1,000 borrowed for each eighth
that the rates decline. (based on 30 yr amortization) Fall...a wonderful time of year." -Bob Van Gilder, Finance One Mortgage
"Another solid rally today in MBS Land as we headed back to June 2013
rates. Fed tapering is perceived as unlikely in the short term, and
buyers, lenders, and realtors rejoiced. It's been said "the range is
the range until it's not the range anymore", and the good news is that
we've broken some resistance to downward rates. Tempting to float here,
as long as loan officers are MBS savvy and readily available." -Ted Rood, Senior Originator, Wintrust Mortgage
"Rates looking better by the day and if you can live with the quote, then
lets get's started. We can float with an eye on locking at the first
sign of weakness. This may be the last chance to lock in before
roaring higher next year. We all know what happened this year with
rates and it's taken a long time to get back 1/2 of what was lost.
Don't be too lackadaisical or the chance may fade away." -Mike Owens, Partner, Horizon Financial Inc
Today's Best-Execution Rates
- 30YR FIXED - 4.125%
- FHA/VA - 3.75-4.4%
- 15 YEAR FIXED - 3.375%
- 5 YEAR ARMS - 3.0-3.50% depending on the lender
Ongoing Lock/Float Considerations
- Uncertainty over the Fed's bond-buying plans and more recently over Fiscal Policy has been making for a tough interest rate environment.
- A lack of data due to the government shutdown caused rates to experience moments of paralysis while headlines suggesting the shutdown might/might-not end, as well as a seizing-up of short term funding markets caused unexpectedly high volatility--enough to be felt in longer term rates like mortgages.
- After a deal was reached to avoid going over the debt ceiling, funding markets thawed and rates returned to the same 'wait and see' range that existed before the Fiscal drama.
- Markets continue to be most interested in economic data and it's suggestions about the longer term trajectory of the economy. This will shape expectations for Fed policy in the coming months, and thus inform the direction of interest rates.
- The stronger the data the more likely the Fed is seen as reducing asset purchases. Rates would rise under this scenario, but the most recent FOMC Meeting (and more importantly, the Fed's decision to hold off on tapering) suggests that they'll attempt to keep the pace of rising rates moderate as long as inflation isn't adversely affected. The delayed release of the September jobs numbers on October 22nd helps confirm that.
- (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario. There are many reasons a quoted rate may differ from 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).