May 15, 2013
Mortgage rates had a good day, despite the fact that the day-over-day change from yesterday is flat to slightly higher. Part of the reason for the higher average rate (by .01%) today has to do with late day negative reprices yesterday that weren't yet reflected in our daily marks. This helps the best-execution rate for conventional, 30yr fixed loans, stay in it's 3.625% zone. Lower rates continue to be viable options in some scenarios, but are increasingly costly, moving lower from 3.625%.
Bond markets, including MBS (the 'mortgage-backed-securities' that most directly affect mortgage rates), have been on the back foot all month, with the latter making a new low every single day since May 1 (when MBS move lower, rates move higher). Today's trading had the redeeming quality of NOT making a new low. We can't conclude anything from 1 session, but it does at least introduce the possibility that we're digging in at recent highs to make a range between now and next week's FOMC Minutes. This would look more likely if we see a repeat performance tomorrow.
Loan Originator Perspectives
“A rate spike reprieve today. The 10-year Note yield (which serves as a benchmark for the mortgage bonds that lenders use to price consumer rates) is currently holding at 1.94%, providing some support from a further rate spike. Today anyway. Release of the May 1 FOMC minutes next Wednesday is a big day for rate markets. Still very cautious ahead of that day, and days like today are good opportunities to lock rates when it's volatile like this. ” -Julian Hebron, Branch Manager, RPM Mortgage
"Another unsettled day in rate markets on Tuesday, with opening gains quickly evaporating, only to reappear this PM. Volatility is the week's prominent feature, and floating is not for the faint of heart. Our rates are in line with Monday's for the most part; real question is where they'll be after Fed minutes are released next week." -Ted Rood, Senior Originator, Wintrust Mortgage
"The past few days sure illustrates how quickly rates can rise and how important it is to have a well informed loan officer on your side. Hopefully we have found some support at current levels. If you floated to today, I would feel comfortable advising you to float until tomorrow. If this support can hold, we should see some improvements with lender rate sheets. " -Victor Burek, Open Mortgage.
Today's Best-Execution Rates
- 30YR FIXED - 3.625%, (3.75% not far from sharing the best-execution space)
- 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 challenged the long term trend higher, but failed to sustain a breakout
- EU and domestic economic data remain relevant to mortgage rates, but uncertainty over the Fed's bond-buying plans through the rest of the year is causing volatility
- The further we've progressed into 2013, the faster the swings have become
- (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).