May 7, 2013
Mortgage rates rose again today, continuing the steady move higher seen yesterday. In the bigger picture, Friday's jobs report did the most severe damage, taking rates much higher on that single day than yesterday and today combined. Without any meaningful data to motivate movement, bond markets (which include the mortgage-backed-securities or MBS that directly influence rates) have been adrift so far this week--continuing to trade defensively--still rattled by Friday's move.
Conventional 30yr Fixed 'best-execution' remains at 3.5% today, which is an eighth higher than the 3.375% achieved last week. That means that the actual interest rate quote you'd receive (or have received) isn't likely to have changed today, but the costs involved with obtaining that rate moved higher for most lenders. Depending on your scenario, this could mean increased closing costs or a decreased amount of lender credit.
The week on Wall Street continues to be subdued in terms of market moving data tomorrow although there's incrementally more potential for volatility. Namely, the 10yr Treasury auction in the afternoon may have an impact on MBS, which could in turn affect mortgage rates. The fact that we haven't seen a firmer bounce toward higher rates has been somewhat reassuring so far this week, but it's too soon to assume that the post-Jobs-Report move higher has fully run its course yet.
Loan Originator Perspectives
“Sedate day today in MBS markets as our pricing improved minimally over Monday's. Still nice that we are in established trading range, at least we didn't continue Friday's big sell off. I'm still cautious about floating unless client's risk tolerance is high. As equities continue to outperform, it's hard to be excessively bullish on MBS.” -Ted Rood, Senior Originator, Wintrust Mortgage
"The dip was nice for a week. Maybe we'll get back into that lower range, but who knows. Locking is not a bad idea since the chances of a dip are far lower than a rise. Still better than worst levels of the year." -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
- After rising consistently from all-time lows in September and October 2012, rates are challenging the long term trend higher
- Lingering concerns over European finances have helped keep Core EU rates low, which has some "spillover effect" onto US 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).