April 10, 2013
Mortgage rates moved higher today, bringing rates back in line with last Thursday's, depending on the lender. After Friday concluded an impressive two week run of stable or lower rates, the current week has seen rates rise 3 days in a row. It continues to be the case that the pace of the movement is neither inconsequential or excessive, but somewhere in between. The best execution (what is this?) for 30yr Fixed loans moved down to 3.5% through the course of last week's improvements after a long stay at 3.625%. Today's weakness brings the first signs of a potential shift back to 3.625% with several lenders more advantageously priced there in terms of rate vs closing cost.
Yesterday we noted that rates markets had their backs against the wall with respect to the ongoing bounce higher after hitting 3 month lows on Friday. Rather than find that wall to be supportive, it actually was pushed over fairly easily and we're now trending higher again. In other words, there was a chance that rates were done moving higher yesterday and that we'd start going more sideways. Instead, we're right back to moving higher today, which actually leaves Treasuries and mortgage rates back in their longer term trend toward higher rates. We'll need to press back into the 1.7's in 10yr Treasuries and make a convincing run toward 3.375% Best-Execution rates in order to change that.
Loan Originator Perspectives
"There's no way to know for sure whether or not rates will go back to where they were on Friday, but we do know they probably will if you want to wait long enough. That could be anywhere from 'days' and 'years.' The other thing we know--which may be useful here--is that we're still pretty darn close to where we were late last week, and in the biggest picture, such rates are still pretty darn close to all time lows. Thus my typical advice: if you like it, lock it." -Bob Van Gilder, Finance One Mortgage
"Lots of rate consumers like to "hold for lower" when rates dip, but that's proven painful in 2013. A few short-lived rate dips aside, rates have been up .375% most of 2013. Consumers who don't lock on the dips lose out on those lower rates. We enjoyed some nice lows Thursday through Tuesday which were driven by nuclear rhetoric out of North Korea plus a poor U.S. jobs report. But now rates are creeping up again. Still not so much higher that refinancers can't benefit, and rates are certainly attractive for home buyers. But still, more pain today for those who decided to hold for lower." -Julian Hebron, Branch Manager, RPM Mortgage
"Locking since last Friday has been a wise move. Rates have leaked higher since. Float at your own peril. There is nothing to gain doing so." -Mike Owens, Partner, Horizon Financial Inc.
Today's Best-Execution Rates
- 30YR FIXED - 3.5%
- FHA/VA - 3.25% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED - 2.75-2.875%
- 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).