November 24, 2014
Mortgage rates continue making improvements so small and so steady that they're barely noticeable, but they're improvements just the same. That's recently meant that we've technically been in the best territory in nearly a month recently. Despite the fact that it's not materially different than most of the past 30 days, today's rates are officially the best during that time. The most prevalently-quoted conforming 30yr fixed rate remains 4.0% for top tier borrowers, but each day of modest improvement brings us closer to 3.875% and puts 4.125% farther in the rearview.
With the Thanksgiving holiday coming up, financial markets will be cramming a day and a half worth of work mostly into Wednesday. That increases the prospects for volatility over the next 2 days. Indeed, past examples of the 2 days before Thanksgiving suggest we'll see more movement in rates relative to the current trend. Again though, that doesn't take much doing. While past precedent does increase the odds of a bigger move higher or lower, it doesn't suggest that move will necessarily continue after the holiday (about a 50/50 chance that rates continue in the same direction).
Loan Originator Perspective
"Rates seem to be in a holding pattern to me right now with little volatility either way. This tends to make one complacent but that would not be wise. It's important to keep in close contact with your mortgage professional to know when that dynamic of low volatility changes (and it will). For now, floating seems safe but one should check their risk tolerance first before making that decision." -Hugh W. Page, Mortgage Banker, Seacoast Bank
"Another day in the range. Fortunately we had a little support from today's auction to keep us on the right side of the range. With the short week I would be shocked to see a break out of the range, but with some of this week's auctions and economic data it is quite possible. MG mentioned this morning that any dramatic move made this week out of the recent range would probably self-correct in the following weeks as the lack of participants this week may create an over-exaggeration in interest rate movements (potentially). Today's rates warrant heavy lock considerations, 15 days out shouldn't risk floating....albeit I think better rates are in our horizon." -Constantine Floropoulos, Quontic Bank
"I don't believe there is any technical data pushing rates in either direction. We have quite a bit of data coming over the next couple of days and then the holiday weekend. I'm solely working off of gut when I say float day to day in search of improvement and be ready to make a lock decision if things start moving quickly in the wrong direction." Brent Borcherding, brentborcherding.com
"I have been advocating to lock loans once within 15 days of closing. I am slightly changing that due to the very solid auction we had today. MBS have improved quite a bit since rate sheets were published, but not all lenders have passed along the gains. Today, i favor floating all loans overnight to allow time for lenders to improve pricing and to also see if tomorrows more important 5 year auction is just as strong. With month end upon us, we might see more month end buying of treasuries." -Victor Burek, Open Mortgage
"Mortgage bonds were slightly higher today but do continue to trade in a very tight range. Just like a coiled spring explodes once released bonds tend to make a large move following a period of sideways trading in a tight range. I personally believe the move will be higher which will bring down home loan rates. Keep floating but do keep a close eye on the market." -Manny Gomes, Branch Manager Norcom 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).