May 23, 2013
Mortgage rates weren't quite finished with what they began on Wednesday, which was the worst we've seen in a long time. Despite bond markets managing to hold their ground for the most part today, rates were carried higher by yesterday's momentum--that is to say, lenders' rate sheets were worse this morning than yesterday afternoon despite the fact that trading levels in Mortgage-Backed-Securities weren't appreciably worse.
(catch up with yesterday's big move: Why Did Mortgage Rates Skyrocket Past 2013 Highs on Wednesday?)
Considering that yesterday's rates were the highest in exactly one year, today's claim the "over a year" title and best-execution is pushing well into 3.75% for most lenders with some closer to 3.875% already. This isn't universally the case and a few lenders were closer to unchanged, with one or two even slightly better than yesterday, but all are at their worst levels of 2013 after all having been at their best levels 3 weeks ago.
Will it turn around? Will it get better? Now that we've seen such a big move up, is it fair to expect some push back in the other direction? Maybe. This is a fairly frequent sentiment on these pages and when it comes to financial markets it will never stop being true: there's never any way to know what will happen tomorrow. What we do know is that there are historically periods of consolidation after moves like the one we've just seen. More often than not, those can afford fleeting opportunities to make up some lost ground, but it's important to consider that, on the times where this isn't the case, the losses tend to be severe. It's a trade off between a decent chance at modest improvement and a smaller chance of more significant deterioration.
Loan Originator Perspectives
"The carnage stopped in MBS market today, but the damage is done and extensive. Just priced a loan and we lost a solid .25% in rate from Monday to today. While pricing increased dramatically, it's still important for loan officers and borrowers to remember that we're better today than 90+% of the prior 50 years. It's all about perspective. Floating borrowers and those starting loans need to realize we've broken long term support, and rates are as likely to continue upward as to regain prior levels." -Ted Rood, Senior Originator, Wintrust Mortgage
"With rates at the high of the year and jumping .375% just this week, there is no reason to think they won't keep rising. Floaters who are in process can count on a different rate come closing time. If you locked you now have a rate brag about. I really hope no one was floating. Loan officers who were floating their clients are now on suicide watch. Not a happy place for them right now. " -Mike Owens, Partner, Horizon Financial Inc.
Today's Best-Execution Rates
- 30YR FIXED - 3.75%
- FHA/VA - 3.25% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED - 2.875-3.0%
- 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
- Fears about the Fed's bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed confirmed their intention to taper bond buying programs sooner vs later
- (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).