April 24, 2013
Mortgage rates continued their recent pattern of limited movement, rising almost imperceptibly today. This keeps them in line with recent lows, which they've held uneventfully since the beginning of last week. Although today isn't quite the best of the bunch, the recent range is the the lowest stretch of several comparable days since early January. Best execution for Conventional, 30yr Fixed loans remains near the more aggressive side of 3.5%, meaning that the borrowing costs associated with 3.5% are about as low as they go before 3.375% begins taking over as a more cost effective option.
With rates at current levels, anyone who "missed the boat" so to speak, heading into the end of 2012 into early 2013 is now more than half-way back to 2012's all-time lows, or very close to it. There are two ways to look at the recent movement. On one hand, the ongoing refusal to break below 3.5% mortgage rates (or the 1.68% area in terms of 10yr Treasury yields) could signal that we've hit some resistance, in which case it would make sense to lock. On the other hand, we've traded near these levels for more than a week and risk-takers might find some reassurance in the fact that we have yet to rise abruptly from recent floors.
Loan Originator Perspectives
"Treasuries have hit (and bounced from) 1.67% several times in the past few days, and while our range is holding, there's growing resistance to further gains. What this means for borrowers is that the current market should not be taken for granted. Rates are near the best of the year, if you're happy with the pricing on your loan, can't hurt to lock it. " -Ted Rood, Senior Originator, Wintrust Mortgage
"I think the majority of consumers are aware rates have dropped, specifically those that are on the fence looking to refinance at the right time. I've been saying that this is the chance to finally lock in as close to the all time low rates of last fall as possible. The chances of besting last years rates is slim, so why blow the opportunity twice." -Mike Owens, Partner, Horizon Financial Inc.
"With the current resistance facing lower rates both in the mortgage world and in 10yr Treasury Benchmarks (1.67-1.70% floor), we feel it is imperative to consider locking anything closing in the next 10-15 business days, as the risk outweighs the reward. This doesn't mean that rates couldn't improve in the coming weeks. Indeed, there has been a shift in the momentum overall, but until we see it extend beyond current roadblocks, it isn't substantial enough to suggest reward outweighs risk when it comes to floating short term." -Constantine Floropoulos, Quontic Bank
"I would advise locking if you are within 30 days of closing. Economic weakness or overseas uncertainty could take rates lower, but they're close enough to all time lows right now that locking will help you sleep easier without the risk of waking up on the wrong side of a possible move higher from this recent flatness." -Justin Dudek, Supreme Lending
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).