February 22, 2013
Mortgage rates were slightly higher today, despite moderate improvements in underlying bond markets. This is primarily due to fairly pronounced weakness late in the day yesterday combined with the fact that bond markets opened in even weaker territory before improving to modestly positive levels. Beyond those timing considerations, the gains were simply quite small in the first place. Some lenders offered improved rate sheets as market levels crept back into positive territory but on average, borrowing costs are slightly higher than yesterday for the prevailing 3.625% Best-Execution rate for 30yr Fixed, Conventional loans, though not quite as high as they were on the 2/13.
(What is A Best-Execution Mortgage Rate?)
Yesterday we logged a bit of frustration with the improvements, noting that they were not really strong enough to provide much reassurance or hope for a near-term rates recovery. Today we saw very similar resistance to improvement. In fact, today's positivity was slightly weaker than yesterday's. Again, this doesn't mean that the outlook is necessarily bearish. There are several reasons that Treasuries and Mortgage markets could be tentative heading into next week, but like the burden proof is on STRENGTH (i.e. movement lower in rates) to demonstrate it can counteract the prevailing trend higher. Given the evidence presented over the past two sessions, there's clearly still a reasonable doubt.
Loan Originator Perspectives
"We find ourselves in an interesting crossroad. Our position is to lock if you are closing within the next 21 days, however we feel that the overall momentum may be in our favor. The bond market has responded well within a tight technical range, and if the momentum continues in the following weeks we will see an improvement. That however is yet to be determined, and with recent volatility we would strongly advise locking into a weekend at this point. " -Constantine Floropoulos, Quontic Bank.
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 but consistently since hitting their all-time lows in September and October 2012.
- Regardless of global or domestic economic weakness, the subsiding fear of a disorderly EU breakup will continue to prevent rates from getting back to those lows.
- This is very likely to be the case unless a similarly panic-inducing event were to come into focus, or if a disorderly break-up regained the spotlight.
- Sequestration, negative growth, and generally choppy political and economic environments around the world DO NOT constitute that sort of panic.
- This is a "rising rate environment" until further notice, though pockets of recovery and consolidation can provide smaller-scale opportunities against the larger-scale backdrop.
- (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).