September 13, 2013
Mortgage rates improved slightly today, bringing them to their best levels of week. The day's economic data, which stood a chance to push rates in either direction, ended up having minimal impact. This suggests the market's focus has firmly shifted toward next week's extremely important FOMC Announcement on Wednesday and that rate fluctuations should be relatively contained until then. This is no guarantee that rates won't move higher on Monday morning--simply that the extent of such movement is muted before Wednesday.
Conforming, 30yr Fixed scenarios moved more firmly into 4.625% for the most efficient combination of upfront cost and monthly payment (best-execution). Some stragglers remain at 4.75%.
Loan Originator Perspectives
"Another great Friday! Going into the weekend one may consider locking, however the consensus is that we should see a bit more improvements going into Wednesdays announcement. Sit tight, especially if you have floated thus far. Next week is huge and the fate of future borrowing costs is at stake. My opinion is the damage has been done, the results appear to suggest we still need the Fed, however my opinion is partial. 15 days out should look to lock prior to Wednesday." -Constantine Floropoulos, Quontic Bank
"Today's consumer sentiment and expectation numbers missed expectations, and rates improved this AM. We've hung tough this PM, Friday afternoons are notorious for selloffs, but none as of press time. Floating borrowers need to make the call by Tuesday, floating into Wednesday's FOMC statement carries considerable risk." -Ted Rood, Senior Originator, Wintrust Mortgage
"Weaker than expected Retail Sales numbers and Consumer Sentiment have helped the fannie mae 4.0 coupon revisit the price highs of yesterday resulting in basically unchanged rate sheets. I am not a fan of locking on Friday and that continues today. I favor floating over the weekend especially if it allows you to lock Monday and a shorter time frame." -Victor Burek, Open Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.625%
- FHA/VA - 4.25
- 15 YEAR FIXED - 3.75%
- 5 YEAR ARMS - 3.0-3.50% 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
- Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher
- Fears about the Fed's bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed indicated their intention to taper bond buying programs sooner vs later
- The June 19th FOMC Statement and Press Conference confirmed the suspicions. Although tapering wasn't announced, the Fed made no move to counter the notion that they will decrease bond buying soon if the economic trajectory continues
- Rates Markets "broke down" following that, as traders realized just how much buy-in there was to the ongoing presence of QE. These convulsions led to one of the fastest moves higher in the history of mortgage rates and market participants have not been eager to be the among the first explorers to head back into lower rate territory until they're sure they'll have some company.
- (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario. There are many reasons a quoted rate may differ from 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).