February 28, 2013
Mortgage rates are even more sharply unchanged today than they were yesterday, which at least saw some consensus toward strength in the morning and weakness in the afternoon. In contrast, today's movements in the secondary mortgage market were completely flat (relative to their average range of motion). This left nearly all lenders at liberty to put out one rate sheet in the morning and call it a day. As such, 3.625% best-execution is unchanged, as are the average costs associated with that rate. As has been the case, adjacent rates at 3.5 and 3.75 may be competitive depending on your scenario.
(What is A Best-Execution Mortgage Rate?)
While there were several pieces of economic data out today, markets didn't seem to care much. If anything, lower-than-expected Jobless Claims figures put a small amount of pressure on Treasuries and MBS early in the day, but it was never enough to push them past yesterday's weakest levels. On the other side of the range, neither did that advance past yesterday afternoon's strongest levels leaving us with a very staid, perhaps even boring bigger picture. When things are so sideways and contained, it can hearken a faster paced break to either side. On the chance that break moves against us, we'd be more defensive this afternoon.
Loan Originator Perspectives
"It appears the sequestration cuts are gonna happen. Who knows what impact that might have as the market already seems totally irrational. If you didnt lock yesterday, today rates are only slightly worse so you should consider locking to remove all risk. However, i like floating to tomorrow see what happens. If the stock market pulls back, mortgage rates should improve. " -Victor Burek, Open Mortgage.
"The opportunities to lock .125% lower than the prevailing rate level of 2013 have been here and gone since Tuesday as MBS rally on three main macro issues: Bernanke reaffirming commitment to QE, Italy's election proving Eurozone debt troubles are far from over, U.S. budget cuts most likely kicking in tomorrow. But this year has been driven by technical factors more so than macro factors, and the techs still leave room for more selling and higher rates. For now, rate shoppers should grab this dip while they can. " -Julian Hebron, Branch Manager, RPM Mortgage.
"Quiet day in the rate markets today for a change. We recouped some of yesterday's losses. The sequester hasn't impacted mortgage pricing yet, but if it does we anticipate it helping rates. Equities are still the surprise as they test multi-year highs. Bottom line: I've got 15 loans for March and all are locked. If I can pay costs and deliver rates my clients are happy with, why gamble??" -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 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).