April 9, 2014
Mortgage rates began the day higher, but many lenders are set to end in line with yesterday's rates after this afternoon's FOMC Minutes. These are the meeting minutes from the Fed's 2-day policy discussion that results in their official policy announcement. Rates had risen after that March 19th announcement and today's Minutes release provided an opportunity for the Fed to further explain some of the factors that may have concerned markets back in March. Of particular note, the Fed expressed its own concern that markets had misconstrued a shift in Fed forecasts for the first rate hike as a movement in a less accommodative direction. In general, "Fed accommodation" has been beneficial for interest rates.
While most lenders began the day with weaker rate sheets, many of those have been recalled and new, lower rates have been issued (aka "positive mid-day reprices"). For some lenders, this merely gets them back to yesterday's latest levels. Others are slightly worse still, while a few are better. On average, rates remain just slightly higher than yesterday, but very close to unchanged. The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) remains 4.375%, with 4.5% nearly as prevalent. Adjusting for changes in closing costs, rates rose 0.01% today.
Loan Originator Perspectives
"The rally continues, but you have to acknowledge that we are now approaching the low side of the range. Do you think there's been substantial news to break through the low end of the range? I don't. I think floating another day or two could get you a little more gain but now is likely the time to take the gains off the table. " -Brent Borcherding, Capital M Lending
"Rates got a little love from today's Fed minutes, dropping slightly after their release. Several lenders issued improved rate sheets, and tomorrow's sheets may reflect better pricing as well. In this case, no bad news (in Fed minutes) equals good news for borrowers!" -Ted Rood, Senior Mortgage Planner, Wintrust Mortgage
"Out of the last 18 of 20 releases of the FOMC minutes, bond yields have risen. It appears today's release is going to buck that trend. So far, post release MBS have moved to the highs of the day (implies lower rates). Some lenders have repriced, but not by much. If you missed locking yesterday, and didn't see better rates this afternoon, I would think floating until tomorrow is worth the risk." -Victor Burek, Open Mortgage
Today's Best-Execution Rates
- 30YR FIXED -4.375- 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).