April 8, 2013
Mortgage rates rose moderately today for the first time in more than a week, marking at least a temporary end to the most aggressive move lower since mid 2012. Rates dropped precipitously to their lowest levels in months on Thursday and Friday of last week after surprisingly weak employment data. Today's bounce higher only undoes a portion of the recent improvement. Best execution (what is this?) for 30yr Fixed loans remains at it's newly reacquired 3.5% level with today's weakness seen in the form of higher closing costs (or decreased lender credit depending on the scenario).
Trading levels in Treasuries and MBS (the "mortgage-backed securities" that most directly influence mortgage rates) began the day in decent territory, but began losing steam in fits and starts as the day progressed. Even the initial rate sheets of the day weren't quite as strong as Friday's but many lenders released negatively revised rate sheets in the afternoon. To provide a frame of reference for the weakness, rates are about halfway between Friday's and Thursday's levels.
Loan Originator Perspectives
"After consistent and considerable gains last week, MBS market sliding slightly this PM. That's not surprising, given how far we came. Still great pricing available, love to have low rates plus the ability to pay costs. It's a win/win for both clients and lenders when that happens!" -Ted Rood, Senior Originator, Wintrust Mortgage
"On Friday I said that lots of rate consumers like to 'hold for lower' rates which has proven painful in 2013. My point was one worth reiterating: lock on the dips like we had last week, because they don't last. Sure enough, rates are higher today. But not so much higher that people can't benefit from some of the dip we got last week. " -Julian Hebron, Branch Manager, RPM Mortgage
"I have locked 3 deals today prior to reprices for the worse and locked a few on Friday as well. It's as if the awful jobs report didn't happen so lock what you can before rates rise further. Reality some times gets lost. It will show up next month on the 1st Friday of May. " -Mike Owens, Partner, Horizon Financial Inc.
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).