April 26, 2013
Mortgage rates finally made a break from their recent flat and sideways pattern, moving officially to the best levels of 2013 by a small margin (this may vary slightly depending on the lender). The day-over-day improvement isn't out of line with average fluctuations in rates, but against the backdrop of the past two weeks, it stands out. Most lenders have been competitively priced between 3.25-3.5% on 30yr Fixed, Conventional loans. While the best execution rate has been 3.5% with 3.375% looming, today's improvements probably tip the scales in favor of 3.375% for some scenarios. Lower rates are available at most lenders and the costs associated with moving lower from 3.375% may make sense for some borrowers.
Since hitting their highest levels in more than 10 months last month, rates have improved or held steady--for the most part--for the past 7 weeks! With that being the case, and with today being the best day of that entire 7 week stretch, it's impossible to argue to allure of locking a rate. That said, there are a few considerations ahead. Monday and Tuesday of next week will be the last two days of the month--a time when the bond markets that underlie mortgage rates can experience a slight boost from money managers buying bonds to balance portfolios for month-end. This doesn't guarantee lower rates, but it's a net positive if all other things are equal. Then the big ticket events start hitting on Wednesday and keep going strong through Friday's Employment Situation Report. These three days will almost certainly decide if rates will bottom out at current levels for a while or if we will extend back to the range from mid-November or late September.
Loan Originator Perspectives
"Rates look good. Floating is probably safe for the weekend, but be ready to lock next week. Can't fall asleep at the wheel. " -Mike Owens, Partner, Horizon Financial Inc.
"For 2nd Friday in a row, MBS market closing near best levels of the week. Looks like economic news is starting to trump optimism, with weak GDP and consumer sentiment numbers providing MBS support. I may lock some loans this weekend if pricing is what we need, but look forward to great rates next week as well!" -Ted Rood, Senior Originator, Wintrust Mortgage
"Nice improvements with MBS today but not seeing all the gains passed along on rate sheets. If your pricing has improved .375 from yesterday and within 15 days of funding, i would lock. Floating everything else over weekend." -Victor Burek, Open Mortgage.
"I keep waiting for something, anything, to move the needle. Despite all kinds of positive and negative news, we seem to be treading water rate wise and are trading in a very narrow range. That leads me to believe that the market is waiting for some type of confirmation, and as it happens the 800lb. gorilla for reports - Non Farm Payrolls - will be released a week from today. Do you feel lucky? If the thought of your interest rate and/or your loan costs increasing makes you nervous, you will need to make a decision quickly in order to avoid that potential volatility." -Brett Boyke, Senior Mortgage Associate, First Centennial Mortgage
"Three Fridays ago on April 5, a weak March jobs report (88k nonfarm jobs created vs. estimates of 190k) sent rates lower, and they've held lower levels since. Today's weak 1Q2013 GDP report (2.5% vs. estimates of 3%) has caused MBS to break higher, which has caused rates to improve yet again. We're now at lows of the year and within striking distance of record lows. Great locking opportunities for home buyers and refinancers to end the week, and to head into a Spring home buying weekend." -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).