June 12, 2013
Mortgage rates moved higher today, keeping them locked in this week's new, higher range. The movement wasn't enough to change the actual rate a borrower is likely to be quoted (conventional 30yr Fixed best-execution rate currently 4.125%). Instead the day over day change would be seen primarily in the form of increased borrowing cost. Additionally, the tendency for individual lenders to make drastically different moves than the average of their peers continues to be an issue. Volatility in capital markets begets volatility on rate sheets and between lenders. It's not likely to die down meaningfully until after next week's FOMC Announcement at the earliest.
Shorter term, there are relevant considerations in the current week as well. Tomorrow morning brings the first significant economic data of the week. Markets are ravenously hungry for any shred of data that may help flesh out a clearer picture of next week's communications from the Fed. It's not overly likely that tomorrow's data could change anything about what the Fed has to say next week, but even if markets perceive it as possible, big market movements could follow and could carry rates easily in either direction.
Loan Originator Perspectives
"MBS reasonably well behaved today outside of a short sell off following the 10 year treasury auction. Overall, we lost a bit of ground, but not enough to significantly influence rates. Sad when a "small loss" day is a good thing, but at this point I'll take moral victories. As stated before, staying with locking bias until market shows me any willingness to improve for more than a few hours at a time." -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).