December 8, 2014
Mortgage rates improved to begin the new week--a welcome development considering last week ended with a strong jobs report and a moderate move higher for rates. Despite that move, we discussed the fact that there was an inordinate amount of resilience in rates given compared to the weakness such an impressive jobs report would normally suggest, and that resilience suggested some latent positivity. The takeaway, as stated, was that "rates aren't feeling predisposed to run higher into the end of 2014 without more motivation."
That was made apparent today as bond markets quickly recouped ALL of their losses from Friday, resulting in the best mortgage rates since the beginning of last week. The most prevalently-quoted conforming 30yr fixed rate for top tier borrowers had edged up to 4.0% last week, and while that's still quite common, it's sharing much more of the spotlight with 3.875% after today.
Loan Originator Perspective
"If you followed my advice and floated over the weekend, you should be seeing better lender pricing today. The recent trend of rates worsening ahead of the payroll report, then slowly improving seems to be continuing. My recommendation would be to continue to float through today, then begin back on the lock once within 15 days of closing approach. If you do wish to pull the trigger today, then wait until as late as possible as some lenders have already repriced for the better as of noon and more should be coming." -Victor Burek, Open Mortgage
"Rates improved today, after worsening late last week. That is a strong sign of resilience and slightly increases the chance for lower rates ahead. I'd float overnight as we start move closer to a week of 10 yr treasury auctions." -Brent Borcherding, brentborcherding.com
"It was a good day for bond markets today as we regained much of the losses from Friday's strong jobs report. Europe (and Japan) continue to face economic headwinds that help our rates, even if indirectly. Buyers with some risk tolerance and time to close might consider floating. If you floated through Friday, and are nearing closing, I'd probably lock later this PM as some lenders have issued improved rate sheets." -Ted Rood, Senior Loan Originator, MB Financial Bank
"The sell off following the NFP did not flow into Monday. Bonds actually approved throughout today's session and some lenders have even repriced for the better. If you lender did not re-price for the better tomorrows rate sheets should look more attractive. Lets hope today's rally may have been contributed to the equity sell off. Keep a close eye on the stock market for if they mount a rally bonds and rates may suffer." -Manny Gomes, Branch Manager Norcom Mortgage
"We are trading in a great range to lock loans, and would need a substantial market moving event to experience a shift in rates that would be worth the risk of floating at these levels. Any positive momentum day to day would warrant strong lock considerations (like today). 15 days or less to close should not even think twice, lock'em up." -Constantine Floropoulos, Quontic Bank
Today's Best-Execution Rates
- 30YR FIXED - 3.875-4.0
- FHA/VA - 3.25-3.5
- 15 YEAR FIXED - 3.125
- 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. After correcting back to 4.125% briefly, November saw a calm, supportive trend that helped establish a ceiling. From there, rates trickled back down into the high 3's by the end of the month.
- 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).