November 26, 2013
Mortgage rates were flat again today. Some lenders were just slightly better or worse compared to yesterday, but on average, there was no change. Heading in to extended holiday weekends, it's not uncommon to see rates show some determination to do nothing. This depends, to some extent, on whether market conditions will allow rates to stay flat. Naturally, if big enough news crossed the wires, rates would move, but we haven't had anything in that realm so far this week. As such the the most prevalently quoted conforming 30yr fixed rate for ideal scenarios (best-execution) remains at 4.375%.
Flat mortgage rates can also be seen as a symptom of a broader holiday phenomenon that may have less to do with the upcoming Thanksgiving holiday and more to do with market focus. Specifically, market participants are focused primarily on next week's official jobs numbers. That report is so much more important to the rest of 2013 than any other data that it doesn't make much sense to be overly aggressive or defensive with interest rates.
Loan Originator Perspectives
"The mortgage world has provided some calm in this short week. Tomorrow is loaded with weekly jobless claims (a day early), Chicago PMI and U of Michigan consumer sentiment, amongst many other releases, yet I have no unease about floating into Monday and December. Enjoy your holiday with friends and family." -Matt Hodges, Charlottesville Sales Manager, Presidential Mortgage Group.
Today's Best-Execution Rates
- 30YR FIXED - 4.375%
- FHA/VA - 4.25%-3.75% (depends heavily on lender)
- 15 YEAR FIXED - 3.5%
- 5 YEAR ARMS - 3.0-3.50% depending on the lender
Ongoing Lock/Float Considerations
- Uncertainty over the Fed's bond-buying plans and Fiscal Policy has been making for a tough interest rate environment where we're not seeing sustained improvement unless it's a correction to even bigger deterioration.
- The Fed's bond buying is the key consideration--not just the initial reduction (aka "tapering"), but the general pace of withdrawal. We've gone from tapering being a "sure thing" in September, to it being on hold until March 2014, and now December 2013 is increasingly possible after the most recent Employment report on Nov 8th.
- Markets continue to be most interested in economic data and its 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 Fed indicated its cognizance of high rates creating headwinds for the recovery, and this suggests they'll attempt to keep the pace of rising rates moderate as long as inflation isn't adversely affected.
- (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).