January 3, 2014
Mortgage rates were even more unchanged today than yesterday. Not only was the average rate among various lenders unchanged, but individual lenders all stayed closer to the yesterday's rate sheets, whereas some were a bit higher or lower yesterday.
That said, the flatness was only accomplished after some mid-day price changes when improving market conditions allowed lenders to release better rate sheets. Before that, the day's average would have been slightly higher. 4.625% remains the most prevalently quoted rate for ideal, conforming 30yr Fixed loans (best-execution).
Although the holidays are officially behind us, the bond markets that underpin mortgage rate movement have managed to remain in "holiday mode." Part of this has to do with the fact that this week still contained a day and a half of down time for bond markets, but the blizzard in New York certainly didn't encourage traders to be in the office.
This time around, light holiday activity didn't result in any extreme volatility for interest rates, as it sometimes can. Although we shouldn't necessarily expect excessive movement in either direction, the level of activity should pick up next week. More traders will be back from vacations (forced or otherwise) and important data will require more attention, especially Friday's Employment Situation Report. The implication of increased activity is more potential movement in rates, for better or worse.
Loan Originator Perspectives
"Maybe next week will shed some light on whether the higher rate trend continues or has hit resistance. The last two weeks have not been friendly (even in light trading) to rate sheets. If I were seeking a mortgage, I would lock. If the non friendly trend in the lightly staffed holiday season continues with volume behind it, it could get ugly, fast." -Steve Chizmadia, Mortgage Advisor, American Capital Home Loans
"Some moderate gains in rate markets today until a late day selloff, as investors heard a farewell address from outgoing Fed Chair Bernanke and economic color from several Fed members. Pricing remained in yesterday's range, but improved enough during the day that several lenders adjusted their pricing. We're likely to still hold until next week's employment data; as usual those reports will dominant markets' attention." -Ted Rood, Senior Originator, Wintrust Mortgage
"Our positive vibe could continue, but it's very hard to be sure. Locking has always been my bias and it still is. If you can lock your rate I would suggest doing so. The real New Year for financial markets returns next week with the full roster back from vacation. " -Michael Owens, VP of Mortgage Lending at Guaranteed Rate, Inc. NMLS # 107434
Today's Best-Execution Rates
- 30YR FIXED - 4.625%
- FHA/VA - 4.25%
- 15 YEAR FIXED - 3.5%
- 5 YEAR ARMS - 3.0-3.50% depending on the lender
Ongoing Lock/Float Considerations
- The prospect of the Fed reducing its asset purchases weighed heavy on interest rates for the 2nd half of 2013, causing volatility and generally pervasive upward movement.
- Tapering ultimately happened on December 18th, 2013. Markets had done so much to come to terms with it ahead of time that it essentially just confirmed the the 6 month move higher in rates, but didn't make for another immediate spike higher.
- That said, we should assume that we're still in a rising rate environment on average.
- NOTE: Lenders had begun adjusting rate sheets to account for the most recent announced hike in Guarantee Fees. This would have unequivocally raised rates by at least an eighth of a percent for almost every borrower, and in most cases .25-.375%. Those changes are now on hold indefinitely. We won't know if they're coming back or not until we hear more official word from new FHFA Director Mel Watt.
- (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).