April 3, 2014
Mortgage rates barely budged today, but the little movement seen was positive on average. Keep in mind though, that means that some lenders were unchanged or slightly higher in rate, while a small majority was slightly lower. When adjusted for day to day changes in closing costs, rates were an equivalent of 0.01% lower today. The most prevalently quoted conforming 30yr rate for top-tier scenarios (best-execution) is between 4.5 and 4.625% at these levels.
The flatness in interest rates reflects the bond market's readiness to digest the most important piece of economic data this month (and every month). Tomorrow morning's Employment Situation Report always has a ton of market-moving potential, and this one is no different. One less common feature of tomorrow's report is that it arrives right at a time when interest rates are pushing up against the higher end of their 3 month range.
When rates--or any financial security really--have been consolidating in a narrow, sideways pattern, it can often precede a more forceful movement in either direction. If we see such a movement tomorrow, it's inclination to go higher or lower would almost certainly depend on the employment data, with a strong result pushing rates higher and a weak result suggesting rates retreat back into the 2014 range.
Any lock/float consideration is an utter dice roll based on the outcome of the report.
Loan Originator Perspectives
"It is always risky to float into NFP, and tomorrow is no different. The odds are equal for worsening as they are for improvement. So what matters most to you? There is no greater guidance once can give going into NFP, the choice is yours." - Brent Borcherding, Capital M Lending
"With the jobs report tomorrow locking is the safe move given improvements today. Floating into the report is risky and therefore could prove painful if rates move higher. A beat of market expectations will likely cause a rise in rates, while missing the expectation could keep rates stable. This will depend on which way the numbers fall and if any big surprises print. The winter weather factor should also be losing steam as a cause for the lack of job growth in recent months." -Michael Owens, VP of Mortgage Lending at Guaranteed Rate, Inc.
"Float at your own risk overnight. If jobs data is better than expected, rates will be pressured higher. If jobs are worse then expected, rates could rally. The further it is in either extreme the farther rates will move." -Victor Burek, Open Mortgage
"Slight improvements in rates today as we recovered part of yesterday's losses. Tomorrow's jobs report looms, and is released before lenders issue their morning rate sheets. Weak jobs numbers this winter were shrugged off as weather impacted; if tomorrow's misses, it will be tough to blame on weather. If it beats expectations (and prior reports are revised upward), we'll lose ground." -Ted Rood, Senior Mortgage Planner, Wintrust Mortgage
"The market is looking for a strong payroll number tomorrow and it appears to me it is already priced in as stocks have hit new all time highs and mortgage rates are at the higher end of their range. If tomorrow's number misses expectations we can see bonds rally. If the number comes in better than expectations, current levels can become the new low in what will become a new range for rates. The risk vs reward for floating are too high. Locking today is a much safer bet." -Manny Gomes, Branch Manager, Norcom Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.5%-4.625%
- FHA/VA - 4.00%-4.25%
- 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).