March 14, 2013
Mortgage rates were flat for the third day in a row, despite strong economic data and a weak 30yr Treasury Auction (two things that normally connote higher rates. Bond markets had already weakened appreciably overnight, however, and were thus in a better position to digest the data. MBS (the mortgage-backed-securities that most directly influence rates) clawed their way back to unchanged levels by 2pm Eastern time, and mortgage rates followed suit with many lenders "repricing" from higher rates this morning to something more in line with yesterday's rate this afternoon. As such, Best-Execution remains at 3.75 with 3.625% close by.
(What is A Best-Execution Mortgage Rate?)
Although tomorrow brings a decent batch of economic reports, fully capable of impacting mortgage rates, bond markets have displayed quite a bit of resilience (or "indecision" depending on how you want to look at it. In simplest terms, rates notched higher following last Friday's employment data, but have been in a well-contained holding pattern since then. In terms of US Treasuries, this is most easily considered by looking at the zone from 2.0 to 2.075. Barring major surprises from data or headlines, the movement seems to indicate a sideways indecision ahead of next week's FOMC Announcement--a fairly common trading pattern leading up to big-ticket data. It's worth considering that another common occurrence is to see the pattern challenged even before the event itself. The fact that rates have gone no higher than Friday's is heartening, but they seem equally willing to go either direction and simply waiting for sufficient inspiration before getting started.
Loan Originator Perspectives
"We've seen rate markets suffer for no apparent reason recently, but the tide reversed today. The 30 year bond auction wasn't particularly well received, but rates improved after it. We're due for some MBS love, now just have to see if it's a continuing trend. PM rate sheets best in several days!" -Ted Rood, Senior Originator, Wintrust Mortgage.
"We're locking loans as purchase clients get into contract and as refinance clients send in all materials to be properly pre-approved. Holding for rates to return to record lows has proven futile since January. Some miscellaneous dips of .125% have occurred in the past 2 months then rates rise again within 1-2 days. That's more upside risk than most clients are willing to take." -Julian Hebron, Branch Manager, RPM Mortgage.
"Rates are the same as yesterday and fighting a battle against the stock market and strengthening dollar. Maybe we are settling into a new range which would be a nice break from the march higher. We may not be at the all time low for rates, but anything under 4% is excellent. I advise locking as always. Until something big from Europe pops up on the radar or the stock market takes a major breather, rates are not going down. Therefore, don't hold your breath thinking they will." -Mike Owens, Partner, Horizon Financial Inc.
Today's Best-Execution Rates
- 30YR FIXED - 3.75%
- FHA/VA - 3.375-3.5% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED - 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).