March 28, 2014
Mortgage rates finally experienced a correction to the 5-day winning streak that had carried them lower after last week's spike. On a slightly unsatisfying note, the winning streak was never quite able to erase last week's losses and by the time today's weakness is factored in, rates are right in the middle of the recent highs and lows. When adjusted for day to day changes in closing cost, rates moved 0.03% higher today on average. That leaves the most prevalently quoted conforming 30yr rate for top-tier scenarios (best-execution) at 4.5%, with a few lenders still close to 4.375%.
Having strung together so many days in a row without moving higher, today's correction was increasingly likely. The thing about those sorts of corrections, however, is that they don't necessarily connote a full-on SHIFT in the other direction. To be clear, it is risky to PLAN on such things happening, but next week has a good amount of economic data and the extremely important Employment Situation report on Friday. If the data is weaker than expected, rates don't necessarily have to move higher simply because they moved lower 5 out of the past 6 days. If the data is balanced or stronger, rates likely won't go any lower.
Loan Originator Perspectives
"Our 7 day winning streak came to a halt today, but we regained a portion of the losses in the PM. Next week ends with the NFP report, and begins with Chicago Manufacturing Data. It will be a fun filled week, if you're floating, have your loan officer on speed dial!" -Ted Rood, Senior Mortgage Planner, Wintrust Mortgage
"The Friday sell off occurred. Mortgage bonds headed into negative territory this afternoon prompting a mid day reprice. Bonds did remain above key support which is a good thing. If you did not lock this morning I would float over the weekend. A lot can happen in Ukraine between now and then." -Manny Gomes, Branch Manager, Norcom Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.5%
- FHA/VA - 4.00%
- 15 YEAR FIXED - 3.5%
- 5 YEAR ARMS - 3.0-3.50% depending on the lender
Ongoing Lock/Float Considerations
- The Fed has stayed the course on their $10bln per meeting reduction in bond buying, though markets have handled it relatively calmly compared to the days of "coming to terms with tapering" in 2013.
- Rates fell significantly in January, leveled-off in February and have been taking choppy steps higher in March
- Some mitigating factors had kept rates from moving too far out of a narrow range, including the uncertain impact of weather on recent economic data as well as geopolitical risk surrounding Ukraine
- As soon as investors can have more confidence that the incoming data is an accurate representation of economic conditions, we should see more willingness for rates to react accordingly, with weaker data helping keep rates lower and stronger data pushing them back toward January's highs.
- That confidence is increasing in March with a strong jobs report and more aggressive forecasts on rate hikes from the Fed. Ukraine has offset that somewhat, but the general trend continues to be toward higher rates.
- (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).