April 1, 2013
Mortgage rates improved slightly today, helped along by a weak manufacturing data on an otherwise quiet day. Had it not been for that report at 10am, bond markets including MBS ('mortgage-backed-securities' that most directly influence mortgage rates) might have remained in the weaker territory that characterized the morning hours. Several lenders released positively revised rate sheets in the afternoon, bringing the average back down to something just slightly better than "unchanged" vs Thursday. Even then, a few lenders are still worse off than last week while others moderately lower in cost. Best execution (what is this?) for 30yr Fixed loans remained at 3.625%.
It might not be possible to convey the actual extent to which markets were quiet today. The whole of Europe and some of Asia were off for the Easter holiday. This had a profound effect on US market volumes and illustrated how important European events have been for domestic trading recently. Certainly the fact that it's the day after a major US holiday plays into the quietness as well, but combined with the absence of European markets, it made for the lowest volume session of the year for US Treasuries and among the lowest for MBS. This is guaranteed to change tomorrow through Friday with markets back online, headlines expected from Italy, and the super important Employment Situation Report coming up at the end of the week.
Loan Originator Perspectives
"Pricing is mixed today. Rates on loans to $417k are a bit lower, which was helped a bit by weaker manufacturing data released this morning and not much else because European markets are closed today. Meanwhile rates on jumbo loans above $417k are a bit higher, which is due more to cautionary lender pricing than to MBS market performance. Locking opportunities are mixed today depending on borrower equity and property types." -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%
- 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).