April 21, 2014
Mortgage rates were just slightly higher today, extending a more forceful move higher last Thursday. Whereas markets reacted to deescalating tension in Ukraine and stronger domestic economic reports last week, the current week is off to a slow start. The underlying financial markets that affect mortgage rates didn't see any excitement for better or worse, keeping what has been a flat range for several months intact for yet another day.
Most lenders were in slightly weaker territory today, but not enough to prompt a change in actual contract rates. That means that the weakness was seen in the form of slightly higher closing costs for the same rates quoted on Thursday. As such, the most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) remains at 4.5%. When adjusted for day-to-day changes in closing costs, today's rates are 0.02% higher.
Despite the lack of inspiration, markets did move over the course of the day, and generally not in favor of lower rates. Several lenders were forced to reprice to slightly weaker offerings in the afternoon. Even after that weakness, rates remain near the center of their 2014 range.
Loan Originator Perspectives
"Not much going on this week as far as economic data until we get jobless claims on Thursday. If you floated over the holiday weekend, I would continue to do so until tomorrow but make sure you stay in close contact with your loan officer." -Victor Burek, Open Mortgage
"Float--After Thursday's sell off into the long weekend and lender's defensive positioning, I believe you may see some small gains passed along to the consumer if we just hold current levels. With no majors news scheduled tomorrow morning, I think these levels are likely to hold and there isn't a large risk of things worsening." -Brent Borcherding, www.brentborcherding.com
"Things were quiet today after Thursdays sell-off and we did not get a bounce in prices which tend to follow a big down day. We do have a big news week this week along with treasury auctions. Decent auctions will help to recapture some of Thursday's losses. Float and look for a comeback but be ready to lock if we don't get one." -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 took 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.
- Barring surprises, even within the very narrow trend from January through March, we've seen a slight bias toward higher rates. It will take economic or geopolitical surprises to push back against that momentum.
- (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).