March 25, 2013
Mortgage rates were, once again, unchanged in many cases today, though some lenders were slightly lower in cost than Friday's latest offerings. Trading levels in MBS (the mortgage-backed-securities that most directly influence rates) started the day off in territory that would have been consistent with higher rates, but improved fairly quickly as bond markets shrugged off news that Cyprus had reached a bailout agreement with the EU. Best-Execution for 30yr Fixed, Conventional loans is 3.625% to 3.75% depending on the scenario, lender, and borrower preference.
(What is A Best-Execution Mortgage Rate?)
Last week, markets were transfixed by all things Cyprus. Lawmakers and EU Finance Ministers were tasked with agreeing on a bailout deal for Cypriot Banks over the weekend. The fact that this was accomplished mostly uneventfully seems to be having an anticlimactic effect on both sides of the market--one in which the implications and considerations of future issues are more of a concern than Cyprus itself. Particularly, the ramifications for Italy (largely seen as the 'next in line' for EU Fiscal drama, and no stranger to it in the first place) are helping safe-haven interest rates, such as US Treasuries, stay low.
In addition to the precedent set by the Cyprus Bailout, Italy has bigger fish to fry--something they'll be trying to do this week. It has been and continues to be the case that Italy is the biggest risk to EU fiscal stability, and not a problem that can be solved with EU intervention. Headlines concerning the potential formation of a new government are expected to start coming in tomorrow and Wednesday, and could have a more significant impact than any of the Cyprus sideshow had this past week. US markets may not have long to react owing to the Good Friday holiday as well as an early closure on Thursday. This could increase the volatility on the chance we get any major news out of Italy this week.
Loan Originator Perspectives
"Nice recovery in rate markets this PM after a lower open based on Cyrpus' banking "solution". We don't think seizing private funds is going to instill widespread confidence in Europe, and the market movement confirms that logic. This is a short week, with markets closed on Good Friday. We typically see conservative rate sheets over holiday weekends, wouldn't be a surprise if the best rates of the week come before then." -Ted Rood, Senior Originator, Wintrust Mortgage.
Today's Best-Execution Rates
- 30YR FIXED - 3.75%, 3.625% coming back into view
- FHA/VA - 3.375-3.5% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED - 3.00%, 2.875% coming back into view.
- 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).