December 30, 2013
Mortgage rates continued lower to begin the week after pulling back just slightly from 3-month highs on Friday. Activity continues to be subdued in the financial markets that underlie the day to day movement on lenders' rate sheets, making day-to-day changes less a factor of the day's events and more to do with random chance.
In addition to that randomness, there's certainly been default momentum leading higher in rates. In general, that momentum has now led rates back to longer-term highs seen in August and September right as the year draws to a close. While this isn't an environment where you'd want to plan on falling rates, the way that we've hit recent highs presents the first opportunity to see a pocket of improvement within the longer-term trend higher.
That said, the amount of improvement will be relatively limited ahead of next week's important Employment Situation report. It's entirely possible that we continue to hold the prevailing 4.625% level as the most prevalently quoted rate for ideal, conforming 30yr Fixed loans (best-execution), with the only changes being seen in the form of closing costs.
Loan Originator Perspectives
"A small belated Christmas gift to borrowers and originators today as rates dropped somewhat. Existing home sales for November came in slightly below expectations, and prior months were revised downward as well, a small piece of non rosy economic news. Applicants who are floating loans may well want to examine today's pricing; with a shortened day tomorrow and markets closed on New Year's Day, lenders may price conservatively in the morning." -Ted Rood, Senior Originator, Wintrust Mortgage
"Last days of the year and no one is steering the ship. Maybe next year will begin on a positive note for rates, but we won't know until next week when the crew returns from leave. Until then, have a safe New Year." -Michael Owens, VP of Mortgage Lending at Guaranteed Rate, Inc. NMLS # 107434
Today's Best-Execution Rates
- 30YR FIXED - 4.625%
- FHA/VA - 4.25%
- 15 YEAR FIXED - 3.5%
- 5 YEAR ARMS - 3.0-3.50% depending on the lender
Ongoing Lock/Float Considerations
- The prospect of the Fed reducing its asset purchases weighed heavy on interest rates for the 2nd half of 2013, causing volatility and generally pervasive upward movement.
- Tapering ultimately happened on December 18th, 2013. Markets had done so much to come to terms with it ahead of time that it essentially just confirmed the the 6 month move higher in rates, but didn't make for another immediate spike higher.
- That said, we should assume that we're still in a rising rate environment on average.
- NOTE: Lenders will be adjust rate sheets at various times in December and January to account for the most recent hike in Guarantee Fees. This will unequivocally raise rates by at least an eighth of a percent for almost every borrower, and in most cases .25-.375%. Depending on the lender, those changes will take place overnight and have already begun.
- (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).