November 4, 2013
Mortgage rates were mostly flat today, though some lenders offered slightly improved rate sheets compared to Friday afternoon. The improvements would have been small enough to only be seen in the form of "closing costs" and/or lender credit, while the actual quoted interest rate between today and Friday would likely be the same. That means the most prevalent Conforming, 30yr Fixed quote (best-execution) remains at 4.25%.
The bond markets that underlie and best inform mortgage rates had a calm, but agreeable day. There was a previously delayed report on Factory Orders added to the mix (along with the regularly scheduled Factory Orders report), but bonds didn't move on the news. That may change with tomorrow, as the scheduled data is more prone to causing movement.
On an optimistic note, today's strength suggests that last week's negative momentum isn't a foregone conclusion. In other words, rates were flat and began moving higher last Wednesday afternoon. We discussed this trend on Friday, saying it was safer to assume it would continue until it matured. While it hasn't matured, the ability to hold our ground today gives us a chance to be done with it prematurely.
That would become more possible if tomorrow's economic data is weak. The counterpoint is that stronger-than-expected data could reignite the trend and make today look like a quick pause for reflection. In any event, if Friday's all-important Employment Situation Report is significantly stronger or weaker than expected, that will likely set the tone going forward.
Loan Originator Perspectives
"Solid day in rate markets as we recouped most of Friday's losses. Real test will come as the week's data unfolds, starting with ISM tomorrow, and ending with Friday's NFP report. Last week's data was surprisingly upbeat; buyers, agents, and loan officers are hoping this week's is closer to (or below) expectations." -Ted Rood, Senior Originator
"The week has started better than it finished last week. MBS have regained much of what they lost on Friday, but lenders have yet to pass along any of the gains. I would only recommend locking if your lender reprices better and you are within 15 days of closing. " -Victor Burek, Open Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.25%
- FHA/VA - 3.75-4.0%
- 15 YEAR FIXED - 3.25-3.375%
- 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 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 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).