June 11, 2013
Mortgage rates moved lower today, recovering yesterday's weakness and making it back inside the highs seen last Thursday. The bond markets that most directly affect rates had a volatile day, starting in much worse shape, but ending in positive territory. Some lenders offered more significant improvements than others, but had been farther away from the rest of the pack beforehand. All told, the relatively high level of stratification between lenders began to dissipate and broad consensus suggests a conventional 30yr Fixed best-execution rate of 4.125%.
Beyond mortgage market specifics, markets in general continue to be volatile and we'd continue to caution against that volatility. Movements have been larger than average from day to day. Most recent moves have worked against us and today is a good example of the exceptions that comprise the other days. On Friday afternoon, there was a chance that the current week could offer an opportunity to lock at better rates than those seen at the end of last week.
Yesterday's higher rates were cause for concern in that regard and today's now provide the opportunity to lock for anyone floating over the weekend. There's ongoing opportunity for small improvements between now and next week's Fed Announcement, but just as much risk of weakness. Much like the most recent Employment report, the Fed Announcement is the market mover that markets are waiting for, and it can have a big impact in either direction.
Loan Originator Perspectives
"Lock the dips because they don't last. That's the prevailing message of my daily comments since January. During that time rates have risen about .75% with extreme volatility that has caused short rate dips along the way. Also for borrowers with loans above $417k, the good news is that jumbo rates are the same as conforming rates right now." -Julian Hebron, Branch Manager, RPM Mortgage.
"Wacky day in MBS Land as prices dropped, rallied, fell, then rallied again. At press time we're up slightly from yesterday's closing prices, but who knows where we'll be in an hour. Markets like this can drive both borrowers and loan officers crazy as AM quotes become defunct by lunchtime. Until proven otherwise, still going with a locking bias. It will take more than a 3 hour rally to convince me we're headed back to lower rates." -Ted Rood, Senior Originator, Wintrust Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.125%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.25 - 3.375%
- 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
- Just as the pendulum pushed far to the positive side of the rate range in April, the opposite swing occurred in May (now the worst single month for rates on record since 2008)
- (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).