November 21, 2014
Mortgage rates improved again today, carving out another November low, albeit by only a small margin. For some lenders, rates are officially at "one month lows" with October 21st being the last day that similar rates were available. Actually, the rate has been available, but it's the COST required to obtain that rate that's fallen back to 10/21 levels. 4% remains the most prevalently-quoted conforming 30yr fixed rate for top tier borrowers. It's far less prevalent, but 3.875% is being quoted in some cases.
History doesn't offer many examples of the phrase "lowest rates in a month" meaning much less than it does today. The entirety of the past 30 days saw no change in the most common rate quote of 4% and only very little change in the associated closing costs. In fact, "lowest in a month" is more incidental than anything. All it would take would be one bad day to put rates at the highest level in month! And even then we still wouldn't necessarily be over 4% in terms of the quoted rate!
That's an extraordinary lack of volatility. The longer these episodes persist and the narrower they become, the more likely it is that we see a bigger-than-average break higher or lower. Next week could bring the beginnings of such a break, but the more likely time would be the following week as markets begin the trading for December amid several anticipated events.
Loan Originator Perspective
"The current range for rates is a great place to be as the day to day change is minuscule, primarily with minor changes in cost vs the actual rate. With a shortened week ahead and lower than normal market participation, any movement in rates runs the risk of being bigger than it normally would be. For loans within a 15 day window locking is the smart choice, loans with longer time lines to close may float with caution monitoring the current range. A break in either direction will warrant a lock, as any improvement may be short lived." -Constantine Floropoulos, Quontic Bank
"I'm starting to sound like a broken record, but rates were nearly flat today. Pricing improved marginally, enough to raise my borrower paid costs a little, but certainly not enough to change anyone's rates. Some day (soon?) the dam will break and rates will move substantially. Which direction and when? Who knows! Lock/float is neutral now for me, depending on my buyers' risk tolerance." -Ted Rood, Senior Loan Officer, MB Bank
"Rates continue to move sideways. Rallies are met with some selling, and sell offs have been met with buying. While this trend continues, i will continue to advise floating until within 15 days of funding." -Victor Burek, Open Mortgage
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).