April 9, 2013
Mortgage rates were only slightly higher today, after rising at their quickest pace in more than two weeks yesterday. Treasuries and MBS (the Mortgage-Backed-Securities that most directly influence mortgage rates) had their best week since mid 2012 last week and have very likely been in the process of a simple, logical correction from those fast paced moves. This "leveling off" isn't always how things happen after big moves (sometimes they get bigger and sometimes they snap back abruptly), but when it is, it allows for mortgage rates to hold their ground relatively well vs Treasuries. As such, best execution (what is this?) for 30yr Fixed loans remains at 3.5% for the 3rd consecutive session.
Much like yesterday, there was little by way of events to inspire market movement for interest rates today. This left bond markets more susceptible to cues from other markets. To that end, stock markets put some pressure on US Treasuries staring at 10am and yields on the 10yr Note have risen since then. MBS, by comparison, have been more even keeled owing to the monthly settlement process where April MBS are closed out and markets shift to trade May's coupons. For two afternoons in a row, 10yr Treasuries have bumped up against 1.75% and any noticeable break higher could reflect poorly on MBS and mortgage rates when liquidity increases after the settlement process is complete. In simpler terms, interest rates have their backs against the wall to some extent and may be looking to either make a defensive stand here or continue slipping higher depending on how the busier days ahead go.
Loan Originator Perspectives
"If you like it lock it. If you don't like it, don't lock it. TIP: Trying to buy a home? Multiple bids over list price?---have your agent look for withdrawn listings. Create your own "pocket listing." Now go have a great day!!" -Bob Van Gilder, Finance One Mortgage
"Slow day in rate markets today, and, given the gains in equities, we'll take it. No EuroDrama and an iffy bond auction contributed to the sideways movement. The bullk of last week's gains are holding for now, and that's positive news." -Ted Rood, Senior Originator, Wintrust 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
- 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).