February 5, 2014
Mortgage rates were higher again today, further pulling back from a recent run to the lowest levels in nearly 3 months. Like yesterday, today's rise wasn't severe and borrowers wishing to avoid the potential volatility in coming days are still reasonably close to the best rates of the year. That said, today is more of a toss up between 4.25% and 4.375% in terms of the most prevalently quoted conforming 30yr fixed rate for the very best borrower scenarios(best-execution). When adjusted for day to day changes in closing costs, rates rose an equivalent of 0.02% today.
Today's move higher was very much an extension of yesterday's similar behavior. Essentially, rates have been moving so much lower, so quickly, that periodic pull-backs are to be expected. Yesterday's was relatively weak, and was just off the best recent levels, so today's losses don't really change that picture at all. As such, yesterday's assessment still applies in that we're waiting for Friday's big Employment Situation report for the next major dose of motivation. The risk for rates continues to be that a relatively strong jobs report solidifies the bounce higher that may be developing over the past two days.
Loan Originator Perspectives
"If you failed to lock yesterday, today's pricing isn't much worse. I continue to advise my clients to lock ahead of the non farm payrolls report due out on Friday. The jobs data poses more risk then reward at this point. Keep in mind, lenders worsen pricing much faster than they improve pricing." -Victor Burek, Open Mortgage
"Some minor losses in rate markets today as traders warily eyed Friday's NFP report. We may have seen our best rates of the current cycle, unless the January jobs report repeats December's massive miss. All but the most risk oriented borrowers may want to lock if they're happy with current pricing." -Ted Rood, Senior Mortgage Planner, Wintrust Mortgage
"Looking like things could swing the wrong way for us on Friday. Would be a shame if the past few weeks of gains were wiped out with one report on Friday, but it could happen and that's a risk I would not take. Therefore lock before Friday if you can and if we don't see a rate jump so be it. Stocks are looking for any reason to rebound and a rebound would not help bonds." -Michael Owens, VP of Mortgage Lending at Guaranteed Rate, Inc. NMLS # 107434
Today's Best-Execution Rates
- 30YR FIXED - 4.25% -4.375%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.25-3.375%
- 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.
- With that in mind, further interest rate resilience in the face of tapering only looks limited by ability of emerging markets and equities to continue being weak.
- (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).