February 14, 2013
Mortgage rates moved slightly lower this afternoon after beginning the day in line with yesterday's worst levels of the year. Things looked relatively bleak as domestic market participants were greeted with flat trading levels vs Wednesday's late day weakness and stronger economic data in the morning that, at first, threatened to take rates even higher. But bond markets, including MBS (the mortgage-backed-securities that most directly affect mortgage rates) were able to hold their ground long enough to make it to the 1pm 30yr Treasury Auction, which helped rates move lower into the afternoon. Best-Execution for 30yr Fixed, Conventional loans remains at 3.625%, with ongoing stratification between lenders due to recent volatility.
(What is A Best-Execution Mortgage Rate?)
What does "ongoing stratification between lenders" mean? In short, it means that lenders' rate sheets are more different from one another than usual. All lenders differ in price at any moment in time, but most are in agreement when it comes to the most efficient combination of the interest rate and the cost associated with it. That said, lenders differ as to how they approach day to day changes in secondary mortgage market pricing. When things are more volatile, these differences become more pronounced and this can make for bigger gaps between lenders that would normally be closer to each other in calmer times. In some cases, this can even mean that one lender's most efficient rate is different than another's. These are the reasons we're seeing offerings ranging from 3.5 to 3.75 at the moment with a heavy focus on 3.625%.
Loan Originator Perspectives
"The MBS market improved today on the heels of a better than expected bond auction. Lenders still a bit slow to pass along pricing improvements, but at least we've broken (for now?) the trend of daily worsening. If I were floating, I'd wait at least until tomorrow. Pricing should be better, and if the trend continues, we'll all be happy!" -Ted Rood, Senior Originator, Wintrust Mortgage.
"If you are purchasing a home, I don't see it worth any risk in jeopardizing or potentially delaying the transaction by trying to "time" the market. Rates are still near all time lows. If you get an accepted offer, lock you're rate and start the transition of getting yourself into your new home. If you are refinancing, I think there is a little room to consider floating. If you take this risk stay in contact with your mortgage advisor and keep your eyes on Mortgage News Daily for any big market swings that may negatively impact the terms of your loan. " -Steve Chizmadia, Mortgage Advisor, American Capital Home Loans.
"Been a rough few weeks for mortgage rates, but today we hopefully have found a bottom but the trend is still toward higher rates. Most lenders have repriced today following a decent auction of 30 year bonds. If you are purchasing a home, you should lock today but allow time for your lender to improve pricing. Refinancers can always roll the dice but if you are happy with the rate and pricing quoted today, it would be a good day to take your chips off the table." -Victor Burek, Open Mortgage
"Today is an optimistic day for locking one's rate for closings in the near term" -Jeff Statz, Mortgage Advisor, Inlanta 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).