September 3, 2013
Mortgage rates moved up to their highest levels since August 22nd today. moving sideways on average. 30yr Fixed rates for the most ideal scenarios (best-execution) are still most frequently seen at 4.625%, but whereas 4.5% shared a decent amount of that space on Friday, 4.75% is more prevalent today.
These rates come after a mid-day bounce back from even higher rates this morning. The initial damage was caused by domestic markets getting caught up with Monday's market movement around the rest of the world. Stronger manufacturing data put further pressure on bond markets (which include the mortgage-backed-securities, or MBS, that most directly influence mortgage rates).
In the 11am hour, news that House Speaker Boehner supported the president's push for military action in Syria pushed stock prices sharply lower, with rates following to a lesser extent. Some of the morning's weakness in bond markets was recovered. Many lenders released improved rate sheets, though they were still nowhere near Friday's latest levels.
Loan Originator Perspectives
"Huge week in my opinion which will set the tone for the rest of the year and beyond. Rates are rising and with a big jobs number, I think the mortgage business will hit a wall. Refinance business is way down and purchase business is not great either. Another 1/2 point + hike in rates and we'll grind to a halt. " -Mike Owens, Partner, Horizon Financial Inc
"Had a couple of interesting lock/float conversations with clients today. One chose to lock ahead of the week's data, the other to float. No disputing this week's data's relevance. Fortunately we have a couple of days before Friday's BLS jobs report, hopefully any market moves will at least be orderly. Encouraging we regained some lost ground this PM, always nice to see positive lender reprices reported." -Ted Rood, Senior Originator, Wintrust Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.625%
- FHA/VA - 4.25% or 4.75%
- 15 YEAR FIXED - 3.75%-3.875%
- 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).