April 22, 2013
Mortgage rates were essentially flat to begin the week, with most lenders inconsequentially higher or lower than Friday's levels. That puts today's rates in the same league with last week's best offerings as well as those seen after the Employment Situation Report on Friday April 5th. For most lenders, these will be the lowest rates since mid-January, though we'd emphasize that the rate itself isn't moving at the moment, but rather the closing costs associated with prevailing rates.
Rates will always vary considerably depending on your scenario, but lenders are currently priced compete for the best borrowers at a rate of 3.5%. Additionally, the costs required to move down to 3.375% or 3.25% have been moving down the longer we've held at 3.5% best execution levels.
The mortgage-backed-securities market that underlies and most directly affects rates was calm this afternoon after settling down from more volatile trading in the morning. There wasn't much on the calendar to offer guidance and that will continue to be the case through the week. That said, this doesn't mean that rates will necessarily stay as flat as they have been. Next week is huge in terms of data and events, and it's not uncommon to see the level of activity pick up in anticipation.
Loan Originator Perspectives
"We caught a nice improvement in MBS market this AM, and the morning rate sheets reflected that. As the day wears on, we've given some of the gains back, but we're still up for the day. Slowly but surely, economic sentiment is starting to reflect more pessimism, and that's a good thing for rates and borrowers!" -Ted Rood, Senior Originator, Wintrust Mortgage
"This could be a new range for rates and that is just fine. Locking is not going to hurt and floating will probably not gain you a whole lot. Therefore, I would lock so you have once thing to think about." -Mike Owens, Partner, Horizon Financial Inc.
"Rates begin their third week about .25% lower than they’ve been most of 2013. Rates touched record lows January 15-16 but have otherwise been .375% higher all year until April 5 when a poor jobs report send rates lower. We’re now about .125% above record lows as we enter the Spring homebuying season. Good for home buyers, and at these levels, still also quite good for refinancers." -Julian Hebron, Branch Manager, RPM 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).