February 27, 2014
Mortgage rates gained even more ground today, and are now getting close to early February's levels, which were the lowest since November. Much of the positivity may owe itself to temporary factors including geopolitical turmoil and month-end trading dynamics in the bond markets that most directly inform mortgage rates. After moving down to 4.375% yesterday, today's most-prevalently quoted rate for the best scenarios (best-execution) remains unchanged, but closing costs will be slightly lower. When adjusted for changes in closing cost, rates would be down 0.03% on average.
Freddie Mac's Primary Mortgage Market Survey came out today (as it does every Thursday). It said rates went higher whereas I'm telling you they went lower. These occasions provide a good opportunity to talk about the differences.
Freddie's survey isn't "wrong" per se. It's just stale data based on a collection period from Monday through Wednesday. Respondents can send their quotes on Monday and even if rates improve substantially over the next two days, Thursday's report will be based on Monday's higher quotes. That's essentially what's going on here today, as rates were, in fact, higher on Monday.
Unfortunately, the Freddie survey serves as the longest-standing and most reliable primary source for most major (and minor) news organizations. Again, it's not that the data is wrong, just that a headline that says "mortgage rates are higher" is misleading for consumers examining the interest rate landscape today. Bottom line: rates are lower--not only today, but also versus last week. You can always check up on the movements in our daily rate report versus Freddie and MBA's weekly reports on THIS PAGE. Scroll down to the chart and slide the bar at the bottom of the chart for more granular detail.
Loan Originator Perspectives
"Floaters were rewarded once again today with improved lender pricing. Data continues to disappoint and global drama in Ukraine is helping as well. I do believe data will continue to disappoint and things are probably gonna get uglier in Ukraine before they get better both of which are good for mortgage rates. With the gains of the week, I think you should strongly consider locking if you are within 15 days of closing. I don't see rates rising very soon, but its time to lock in some of the gains." -Victor Burek, Open Mortgage
"Still recommend locking as soon as possible. Next week will be a big deal. Next Friday the jobs report will confirm if rates move up or down. Of course any drop will be minimal but a rise could be swift. " -Michael Owens, VP of Mortgage Lending at Guaranteed Rate, Inc NMLS # 107434.
Today's Best-Execution Rates
- 30YR FIXED - 4.375%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.375%
- 5 YEAR ARMS - 3.0-3.50% depending on the lender
Ongoing Lock/Float Considerations
- The prospect of the Fed reducing its asset purchases weighed heavy on interest rates for the 2nd half of 2013, causing volatility and generally pervasive upward movement.
- Tapering ultimately happened on December 18th, 2013. Markets had done so much to come to terms with it ahead of time that it essentially just confirmed the the 6 month move higher in rates, but didn't make for another immediate spike higher.
- Rates moved gradually higher into the end of 2013 and began to move gradually lower into the beginning of 2014, helped along by a weak employment report on January 10th. This report raised doubts as to whether or not the Fed would continue tapering asset purchases at the same pace, but it was ultimately a flare up in emerging markets and weakness in stocks that fueled bond-market positivity and allowed rates to hit 2014 lows on the same afternoon the Fed reduced asset purchases by another $10bln.
- Rates got an ostensible push lower from weakness in stocks and emerging markets. As soon as those moves ran their course, the rate rally bottomed out as well. Now we're tentatively waiting for the next move.
- If anything, there has been some natural rebound against the nice move lower in January. Resistance to that move is low due to the fact that interest rates can't currently rely on weak economic data to help them stay lower (normally it would) because most of the weak economic data is being chalked up to unseasonably cold/snowy weather.
- (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario. There are many reasons a quoted rate may differ from our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).