October 6, 2014
Mortgage rates started the week off well, falling back in line with the lowest levels in a month. Rates are close to those seen on Wednesday afternoon and Thursday last week. Some lenders are slightly worst. Others are slightly better, but the average lender is right in line. That keeps 4.125% intact as the most prevalently quoted conforming 30yr fixed rate for top tier borrower. Any changes from Friday would be seen in the form of lower closing costs.
On any given day, there are usually a few events or headlines causing movement in the financial markets that underlie mortgage rates. That was not really the case today. While those markets continued to move, it was of their own volition as opposed to in response to data. The only exception would be that rates markets do seem to be paying attention to the bigger "down days" in the stock market.
If you're trying to decide between locking and floating a rate, keep in mind that current levels have acted as a line in the sand. Below that line, improvements in rate have been smaller and more gradual. Of course there's no guaranty that history will continue to repeat itself, but until something changes, there are diminishing returns for taking risks at current levels.
Loan Originator Perspective
"Improvement in pricing today after a weak opening is nice to see as it appears the new quarter has induced some bond buying. Until we break decisively lower than the current levels, however, I think we're ripe for a bounce back higher at any moment. For this reason I would recommend buyers lock in any short term closings (less than 15 days). For those with a longer time horizon, waiting is likely okay absent any sharp reversals that appear to be more sustained. " -Hugh W. Page, Mortgage Banker, Seacoast National Bank
"The bond market has been surprisingly resilient in the face of the strong jobs report. Even after a weekend to muddle through the report mortgage bonds actually appreciated vs selling off. Can this mean lower home rates may be ahead of us, or is this an opportunity for floaters to lock? I see it as a little bit of both. If you are closing in under 30 days lock if you have time on your side float carefully." -Manny Gomes, Branch Manager, Norcom Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.125
- FHA/VA - 3.75
- 15 YEAR FIXED - 3.375-3.5
- 5 YEAR ARMS - 3.0-3.50% depending on the lender
Ongoing Lock/Float Considerations
- The hallmark of 2014 has been a narrow range in rates. Too many market participants bet on rates going higher in 2014, and markets punished that imbalance with a paradoxical move lower.
- European markets helped that process along and continue to play a prominent role in keeping US rates lower than they otherwise might be.
- From a wider point of view, we're in limbo, waiting for the first significant move away from the narrow range of 4.125% -4.25% (essentially where the 2014 rate recovery has bottomed out).
- As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.' Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy. It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).