April 19, 2013
Mortgage rates were very slightly lower today, but the improvement was just enough to leave most lenders at their best rates of the week. We have yet to see a move below the prevailing best execution (what is this?) rate of 3.5% for 30yr Fixed loans. This means today's improvement was limited to the closing cost side of the equation, and it's technically "the costs associated with a 3.5% loan" that are at their lowest levels of the week. That said, some lenders are closer than others to being more efficiently priced at 3.375%. Virtually any lender than offers 3.5% will also have lower rates available, and paying the extra upfront costs to move down to 3.375% or 3.25% may make sense for some scenarios.
Markets were calm today, with no major events or data on the calendar. The Mortgage-Backed-Securities that most directly affect mortgage rates were particularly sideways, and have generally remained inside a range established by Monday's strength and Tuesday's weakness. The upcoming week has slightly more on tap in terms of potential market movers, but it's the following week that's the biggest deal. The looming presence of that big week of data (4/29 - 5/3) may serve to keep the trading range moderately contained next week, but it's not uncommon to see rates markets "lead off" from these sideways weeks in either direction.
Loan Originator Perspectives
"Rate markets were exceptionally stable today, a welcome event for a Friday. Looking forward to being able to quote the same pricing on Saturday I did on Friday AM for a change! Equities have shifted directions from a couple of weeks ago, no longer trending up regardless of data, and that bodes well for rates in the short term." -Ted Rood, Senior Originator, Wintrust Mortgage
"The mortgage rate market has been trading in a range that allows us to be decisive based on where the benchmarks are (10 Year treasury). Going into the weekend at the lower end of the range makes it important to consider locking your loan if you are closing within the next 10 days. Outside of that we believe rates should improve moving forward." -Constantine Floropoulos, Quontic Bank.
"Data continues to point toward a slowing economy which should keep rates low for the foreseeable future. Not a fan of locking on Friday's, but am advising clients within 10 days of closing to go ahead and lock. All others are floating over the weekend." -Victor Burek, Open Mortgage.
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).