June 11, 2014
Mortgage rates took the day off from their fairly pervasive move higher. Day-over-day rates have been the same or higher for 8 out of the last 10 days. By the skin of its teeth, today wasn't one of them. While a few lenders are unchanged or slightly higher in rate, the average lender is microscopically lower. This wouldn't change the actual rate you're being quoted, but it could make for a slight reduction in closing costs compared to yesterday's quotes (in terms of effective rate, the improvement equates to 0.01%). The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) remains 4.25% for a third straight day.
So far, this week has been lacking in terms of scheduled events to serve as potential sources of inspiration for financial markets. That changes tomorrow as several important pieces of data will be released, led by the Retail Sales report in the morning. Given that rates essentially leveled off today after pushing a bit higher over the past three business days, it's definitely possible that markets are planning on taking their next cue from the data. Generally speaking, rates are still in the process of trending higher, but a weak enough Retail Sales report could change that.
Loan Originator Perspective
"Bit of a choppy day today, but in the end rates were essentially unchanged. The market seems quite comfortable where it's at, which means those hoping for imminent lower rates may be disappointed. Until poor economic data or sudden geopolitical strife arises, locking sooner, rather than later, is likely the expedient course of action!" - Ted Rood, Senior Mortgage Planner, tedroodteam.com
"Bonds did not get a boost after the 10 year Treasury auction. I believe a lot of attention is going to be on tomorrows retail sales numbers. The data does come out in the morning before rates are out so it is possible rates could get worse should the report beat expectations. We are however close to very strong support and further increase to rates should be minimal. If your closing is around the corner I would not take the gamble and lock in. If you have time on your side waiting for a bounce back could benefit you. " -Manny Gomes, Branch Manager, Norcom Mortgage
"I continue to favor floating as the 10 year continues to hold below support at 2.66ish. Tomorrow we do get some data that can impact the markets and our final auction of the week. It isn't uncommon to see rates rally once the final auction is over and all the new supply is absorbed by the markets." -Victor Burek, Open Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.25%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 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. From there, they settled into a flat range mostly consisting of 4.375 and 4.5%, but with occasional forays to 4.25 and 4.625%.
- The bias had been very slightly toward higher rates, it reversed course in early April as expectations grew concerning European Central Bank easing. On several occasions, those expectations would go on to overwhelm domestic economic data--normally the main source of guidance for market movements.
- As of the third week in May, rates were as low as they've been since June 2013, more than confirming a break below the 2014 range. They remained in that range through month-end and grew more volatile ahead of the June 5th European Central Bank Announcement.
- Looking back at recent movement, it's had a disconcertingly small amount to do with 'normal stuff' like economic data and Fed policy. Temporary and unpredictable factors currently account for too much of the movement to make firm bets on rates moving either direction in the short term.
- (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).