April 2, 2013
Mortgage rates held steady or improved slightly today in MOST cases, though this isn't true for every lender. The day itself was flat and uneventful for the Mortgage-backed-securities (MBS) that most directly affect rates, though trading levels were slightly weaker. This means that lenders passed along some of the strength yesterday afternoon that wasn't necessarily enough to justify positive reprices. None of the improvements were enough to suggest a change to the prevailing best execution (what is this?) rate for 30yr Fixed loans at 3.625%. That said, most lenders are at or near their lowest costs for 3.625% since March 6th.
While the first two days of the week have been generally uneventful for mortgage rates, this won't necessarily be the case for the next three. There's no way to guarantee that the events on the calendar will have a big impact in one direction or another, but the POTENTIAL for volatility increases with certain events over the next three days. For risk-seekers, the convenient aspect of these events is that they ramp up in importance leading up to Friday's Employment Situation Report, leaving an "out" in case rates rise too quickly. Tomorrow's ADP Employment data--which is released well before any lenders create their first rate sheets of the day--is always something of a wild card which CAN have a big impact on rates markets, but just as often has no impact. For everyone else, it probably makes good sense to consider the possibility of volatility in the days ahead versus the fact that most lenders are offering their best rates in nearly a month.
Loan Originator Perspectives
"I only floated one loan into today's post holiday Europe open and regretted it. Locked the rest coming out of the weekend though. We're proceeding with a lock bias into tomorrow's and Friday's jobs data." -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).