February 21, 2013
Mortgage rates fell slightly today, pulling back in line with recent offerings after rising to their highest levels in 7 months yesterday. Today's improvements can be traced partly to overnight market movements in Europe. This helped US trading begin the day in a positive tone for rates markets and the morning's economic reports generally continued in that vein. Trading levels in the secondary mortgage market remained steady most of the day and despite a few lenders raising costs slightly at the end of the day, most offered slightly lower costs for the prevailing 3.625% Best-Execution level.
(What is A Best-Execution Mortgage Rate?)
While it was refreshing to see some improvements in rate sheets today, the bigger takeaway was that bond markets (including the mortgage-backed securities that most directly affect mortgage rates) struggled to make it past relatively recent lines in the sand. That's not to suggest the adoption of a defeatist attitude when it comes to potentially improving interest rates--indeed, the longest journey would still start with some sort of single step--but let's just say it's "INTERESTING" to see where markets chose to shy away from more pronounced gains. The point is that we'd need to see more commitment in markets before considering that rates are doing something other than "generally trending higher with isolated corrections."
Loan Originator Perspectives
"The worsening of rates, for the moment, has leveled off. All that we can know about that is that it presents a short term opportunity to lock at slightly better levels than those seen yesterday. Planning on anything else in the context of the recent environment has generally been a bad idea. " -Jeff Statz, Mortgage Advisor, Inlanta Mortgage.
"Caught a brief lock reprieve early then rates got worse this afternoon. 10yr Note looks promising at 1.97, but late MBS selloff still keeps bias on locking side short term instead of "holding for better." " -Julian Hebron, Branch Manager, RPM 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).