April 23, 2013
Mortgage rates barely moved today, but the modest improvements were enough to bring them as close as they've been to 2013 lows in more than three months. Bond markets including MBS (the mortgage-backed-securities that most directly affect mortgage rates) were impressively unchanged for most of the day despite a healthy stock market rally. All things being equal, strong days in stocks tend to coincide with rising rates. Most lenders lowered costs marginally for the prevailing 3.5% best execution rate for Conventional, 30yr Fixed loans.
Economic data was of little concern to bond markets today--something that certainly will not be the case next week when we'll get the Employment Situation Report as well as a policy announcement from the Fed. Even as early as tomorrow, there's more of an opportunity to react to market events with the moderately significant Durable Goods report in the morning and occasionally significant 5yr Treasury Auction in the afternoon. Neither of these events are guaranteed to have a major impact, and even then, we've seen interest rates shun the movement suggested by the data for other motivations. Those other motivations suggest that there is room for further optimism for lower rates, but at the lowest levels in over 3 months and with the ever-present risks that we could move higher before even having a chance to move lower, floating continues to carry more short term risk than locking.
Loan Originator Perspectives
"We continue defining the current range today as MBS improved slightly. Our rate sheets had more pricing available for borrowers' closing costs, and that always helps. Sideways trading also helps secondary departments feel better about passing MBS gains on to loan officers and borrowers. Still locking most loans at application, but at least now we're not sweating out negative reprices during the day." -Ted Rood, Senior Originator, Wintrust Mortgage
"This is getting old, but at the same time it's a good range. If we hung out here for the next few quarters it would be great. All the tire kickers who keep waiting will finally cave and refinance and purchasers will only have to worry about rising prices instead of rising rates. Too much to ask for for sure, but we can always dream. " -Mike Owens, Partner, Horizon Financial Inc.
"Rates continue 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 sent 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.
"Data continues to come in weak here and overseas which supports low interest rates. My recommendation is to lock when you are within 10 days of closing which will allow you to do a 15 day lock which offers the best pricing." -Victor Burek, Open Mortgage
"With today's stock market increase fueled by earnings it is comforting to see treasuries and MBS performing as well as they are. It further suggests that perhaps mortgage rates are here to stay at these levels for an extended period of time regardless of equities. That being said, one should consider locking at these levels especially if closing within 2 weeks." -Constantine Floropoulos, Quontic Bank
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).