February 12, 2013
Mortgage rates continued to inch lower on Tuesday as part of a two day move back down from recent highs. The change in rates compared to yesterday's latest offerings isn't enough to change the prevailing Best-Execution rate for 30yr Fixed, Conventional loans (3.625%), but modest improvements came in spite of weaker market conditions. This means that lenders priced rate sheets more aggressively relative to trading levels in MBS (the mortgage-backed-securities that most directly influence rates). It also means that some lenders whose pricing is tied more directly to MBS levels will be higher in rate.
(What is A Best-Execution Mortgage Rate?)
The fact that rate sheets and MBS moved in opposite directions today could have to do with the timing of several unique events late last week which are now either over and done with, or less of a concern in the current week. All told, the improvements would be better characterized as a tense, but successful evasion of negativity rather than the purposeful pursuit of positivity. Additionally, much of the market weakness arrived in the afternoon and some lenders may recall rate sheets before the end of the day.
Loan Originator Perspectives
"Rates pretty flat today, as would be expected given the market this AM. More importantly, PM prices have declined past some significant support levels, and the stock market appears as resilient as ever. At some point, one would think it would have to correct (benefiting bonds), but until it does, tough for MBS to gain much traction." -Ted Rood, Senior Originator, Wintrust Mortgage.
Today's Best-Execution Rates
- 30YR FIXED - 3.625%
- FHA/VA - 3.25% - 3.5% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED - 2.875%- 3.00%
- 5 YEAR ARMS - 2.625-3.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates have risen moderately from their all-time lows, making for relatively increased reward for floating at the expense of greater risks of loss.
- Rates could easily move higher or lower, and unscheduled, unexpected events can ultimately have the most say in the direction.
- Near term risks in 2013 include the upcoming debt-ceiling debate in Washington as well as the Fed's policy outlook regarding securities purchases.
- Prospects For Extending The Debt Ceiling Deadline currently seem to be preventing a move back down in rate. Passage of such legislation could further support a rising rate environment.
- (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario. There can be all sorts of reasons that your quoted rate would not be the same as 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).