June 13, 2013
Mortgage rates moved decidedly lower in most cases, bringing them to their lows of the week on average. The bond markets that drive rate changes showed solid determination in spite of a batch of economic data that would normally suggest higher rates. In fact, a few lenders are slightly higher in rate vs yesterday, but that speaks more to the stratification of pricing and strategies between lenders than to the broader consensus. Most lenders were in better shape, some of them significantly, but none so much so that it suggested a change to the conventional 30yr Fixed best-execution rate of 4.125%.
Every time in the past month and a half that we've experienced a day like today (which have been few and far between), we've discussed the prospects for an ongoing rise in rates and the opportunity presented by these periods of consolidation or correction. Every time we note the "hope" inherent to such periods--both intellectual and emotional--and emphasize that they continue to be better viewed as opportunities to lock as opposed to signs of a bounce. During a trend higher in rates, this outlook can only serve you poorly one significant time, when and if markets bounce back in the other direction. While that can (and some would argue "should") happen, we won't truly be able to confirm that until after next Wednesday's FOMC events. Between now and then, volatility remains possible, and opportune dips far from guaranteed.
Loan Originator Perspectives
"Nice rally in MBS Land today as Fed ramps down tapering rhetoric. While we're still hesitant to change our locking bias until several days of gains, rates and pricing are better this PM. Will revisit some clients I did quotes for the last couple of weeks and see how much more I can help them now!" -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).