November 6, 2013
Mortgage rates were relatively unchanged today, after rising somewhat significantly in the past week. Yesterday's rates were the highest since mid-October. Some lenders are just slightly worse today, while others improved modestly. On average the most prevalent rate for top tier borrowers remains at 4.25% for a Conforming, 30yr Fixed (best-execution).
Tomorrow is more likely to shake things up as we'll get the long-awaited first reading on 3rd quarter GDP (which had been delayed due to the government shutdown). The biggest market-moving potential is reserved for Friday's Employment Situation Report, however, and this will likely act to limit the potential impact of the GDP data.
Left to their own devices, rates have recently shown more predisposition to move higher, but "recently" is the operative word. This latest push has only been going on for about a week whereas the next most recent identifiable trend has been lower in rate since early September. We're just now getting to the point where any additional increase will challenge that trend lower. If the economic data is weak enough, it could remain intact, but if the data is stronger than expected (i.e. higher GDP and more job creation than forecast), rates would likely continue to rise.
Loan Originator Perspectives
"Marginal gains today as markets await GDP and jobs data to be released Thursday/Friday. October jobs report a wild card due to the Fed shutdown, possible it's considered an anomaly if it misses expectations. Trend still not our friend, will take poor economic data to reverse that momentum. Borrowers who are happy with their current pricing need to look long and hard at the risks/rewards of floating into NFP." -Ted Rood, Senior Originator
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).