May 16, 2014
Mortgage rates were slightly higher today, continuing a move from yesterday that saw most of the early gains evaporate by the end of the day. Today's market activity (which ultimately affects rates) was much more subdued by comparison, making it tough to say if we're seeing some sort of reversal of the recent drop in rates or simply a pause. The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) remains centered on 4.125%. Most borrowers will experience today's move in the form of higher closing costs for the same rates quoted yesterday. In terms of effective rates, that rise in closing cost equates to a hike of 0.02%.
Even after today's move higher, rates remain very close to their lowest levels since July 2013. There were a few days in late October 2013 that were in the same territory, but other than that, and minor day-to-day variations notwithstanding, the past 3 days have effectively been 11-month lows.
Loan Originator Perspectives
Quite a week in rate markets as we posted solid gains through Thursday AM, but regressed slightly after. The biggest takeaway is that we broke out of our previous range, hopefully we'll hold or build on the improvement next week. Close to closing? Almost certainly time to lock and book your gains. If you're further from loan completion and have a bit of risk tolerance, may want to see what the Saturday's Ukraine referendum does for markets next week." -Ted Rood, Senior Mortgage Planner, tedroodteam.com
"Lender pricing this morning was worse than yesterday thanks to better than expected data on housing. It appears to me that lenders worsened rate sheets much more than the movement in bond prices justified. If you floated overnight, I would continue to float over the weekend and see what pricing looks like Monday morning." -Victor Burek, Open Mortgage
"Rates at 11 month lows and could go lower. Locking safe and wise, but trend to lower rates could be building momentum." -Michael Owens, VP of Mortgage Lending at Guaranteed Rate, Inc.
"What a week for home loan rates which moved down almost every day this week with today being an exception. Next week brings a new offering a Treasury auctions. Is see the recent momentum in the Treasury market continuing and bringing down rates with it. If you have a long time horizon 30 days or more floating may bring you lower rates. If you are closing in the coming weeks you should exercise some caution and lock for rates may head up bit before possibly dropping." -Manny Gomes, Branch Manager, Norcom Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.125%
- FHA/VA - 3.75-4.0%
- 15 YEAR FIXED - 3.25-3.375%
- 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, they've since settled into a flat range mostly consisting of 4.375 and 4.5%, but with occasional forays to 4.25 and 4.625%
- The uncertain impact on the economy from the colder-than-normal winter weather as well as geopolitical risk surrounding Ukraine helped the range persist.
- While the bias had been generally toward higher rates, it reversed course in April and rates returned to the lower end of the range by May 1st. As the "weather effects" fall out of the spotlight, market participants are seeing a bit more organic weakness in the economy than they'd expected. The focus is returning to economic data to determine where we go from here.
- As of the second week in May, rates were as low as they've been since November 1st, certainly suggesting a break of the 2014 rate range, but still lacking confirmation from related markets.
- (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).