November 10, 2014
Mortgage rates were slightly higher today, erasing some of the gains seen on Friday, but remaining well within the recent range. The most prevalently-quoted conforming 30yr fixed rate for top tier borrowers had clearly been 4.0% on Friday, but today's weakness makes 4.125% nearly as common. That said, the shift isn't due to the size of the move in rates today, simply the fact that we were very close to the edge of the range to begin with.
Most mortgage companies will be closed tomorrow for Veterans Day. Lenders that remain open to accept locks will not have the benefit of the bond market being open. In these cases, rate sheets are either a carbon copy of the previous business day's or they're slightly worse. That means you'll be waiting until Wednesday before having an opportunity to see any significant changes.
Loan Originator Perspective
"Mortgage bonds were lower today giving up some of Fridays gains. Traders may be playing it safe with the bond market being closed tomorrow. I don't think there is an immediate need to lock on today's weakness. " -Manny Gomes, Branch Manager Norcom Mortgage
"Tomorrow's holiday and bond market closure create even more uncertainty for the week. I like the range we're in, but today unfortunately took us right to the edge of the upper limits. As long as we can hold this range, floating may not be a bad idea. Loans closing within 15 days are locked, 30 days out are floaters for me." -Constantine Floropoulos, Quontic Bank
"With bond markets closed tomorrow, you either lock today or float until Wednesday. MBS have given back about half the gains from Friday, but keep in mind it is happening during very low volume. With tomorrow being a holiday, many investors are absent today. All that said, i think floating is the way to go. The only loans i would consider locking today would be those closing within the next 2 weeks. " -Victor Burek, Open Mortgage
"With a holiday tomorrow, I'm not putting much significance on today's movement. I'm personally suggesting to wait until Wednesday to make specific lock float decisions, as I think we may get some real guidance moving forward. Until then, if given the opportunity, thank a Veteran!" -Brent Borcherding, brentborcherding.com
Today's Best-Execution Rates
- 30YR FIXED - 4.0-4.125
- FHA/VA - 3.5-3.75
- 15 YEAR FIXED - 3.25
- 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.
- For most of the Summer and early Fall months, rates held a narrow range of 4.125% -4.25% (essentially where the 2014 rate recovery has bottomed out) and finally broke to a 3.875%-4.0% range in mid-October. It's too soon to tell if this is a brief window of opportunity or the continuation of 2014's very gradual improvements.
- 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).