April 25, 2013
Mortgage rates were microscopically higher today, doing very little to change the pervasive theme of narrow, sideways movement this week. In fact, today's rates are almost perfectly comparable to those seen on 4/15 and have moved less during those 8 business days than any 8-day stretch we have on record. Best execution for Conventional, 30yr Fixed loans remains at 3.5% with the most aggressive lenders close to 3.375%. Lower rates are available at most lenders for an additional cost and may be viable depending on your scenario.
Not only have mortgage rates been sideways and stable, but related Treasury yields have held similarly narrow ranges with 10yr notes holding mostly between 1.69 and 1.72 during the same time. Such periods of consolidation are typically followed by a more concerted move higher or lower, and markets are likely looking toward next week's slate of important events and data for guidance. It's also not uncommon for rates to start moving even before the important data arrives, in the same way a runner might take a "lead off" in baseball. We have yet to see such a lead-off, and tomorrow's GDP and Consumer Sentiment data will be this week's last chance.
Loan Originator Perspectives
"Stability reigns again today in MBS market as a successful 7 year auction confirmed investor demand for treasuries. Locked on this AM, same pricing as yesterday. Seeing 15 year rates as low as 2.5%.....talk about cheap money!" -Ted Rood, Senior Originator, Wintrust Mortgage
"Not much volatility lately with interest rates as of yet. Even today's better than expected jobless claims couldn't push rates higher. I continue to advise my clients to float until you are within 15 days of funding." -Victor Burek, Open Mortgage.
"It certainly feels like a broken record, but the sideways trading has really been a huge benefit in managing locks. More specifically, when the bond market settles into a tight range it makes it easier to be decisive. Our position has not changed, if closing within 10-15 days you should not speculate, even 21-30 days should strongly consider locking at these levels." -Constantine Floropoulos, Quontic Bank
"Today we saw Jobless claims beat the forecast, but not by enough to make any major shifts within the current pricing range. All eyes will now be on next week's NFP report as the next potential market mover after March’s major disappointing read. Any opportunity to lock within 30 days should be strongly considered. " -Justin Dudek, Supreme Lending
"Sticking with a locking bias this week because MBS are having trouble rallying past current levels. This and the fact that we're just .125% above record lows after spending most of this year .375% above record lows. Next week has more high risk events, so the safe play short term is locking." -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
- After rising consistently from all-time lows in September and October 2012, rates are challenging the long term trend higher
- Some level of panic over the European situation has returned, to the benefit of domestic interest rates.
- Domestic economic weakness has played a role in helping balance the outlook for Fed bond-buying.
- We're at a crossroads where we'll soon see if the "rising rate environment" remains intact or is successfully challenged.
- (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).