June 30, 2014
Mortgage rates were unchanged today. More often than not, when the average rate is unchanged, it's due to a balance between some lenders offering higher rates and others offering lower rates. Today, however, there were more than a few lenders who simply didn't make any significant changes to Friday's latest rate sheets. That said, some may be offering slight improvements this afternoon as underlying market conditions have improved.
The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) remains at 4.125%, with any improvements coming in the form of lower closing costs.
This will be a busy week in terms of scheduled events that can impact rates. In addition, the all-important jobs report will be on Thursday morning as markets are closed on Friday in observance of the Independence Day holiday. Combined with the other events already scheduled on Thursday, there's an uncommonly high amount of market movement potential packed into a short period of time. As Thursday approaches, the risks increase for bigger changes in rates than we've recently seen.
Loan Originator Perspective
"Lender pricing at the open today was very similar to Friday. As the day has progressed, MBS have moved higher in price which could allow lenders to improve pricing later today. If you are within 15 days of closing, you should consider locking especially if your lender reprices for the better. If your lender doesn't reprice better today and you wish to float overnight, be in touch with your lender first thing in the morning as an important economic data report will be released at 10am." -Victor Burek, Open Mortgage
"Markets have been fairly quiet for a bit which tends to breed complacency. Even though we've experienced improvements in pricing for several days now it's important that consumers avoid getting complacent. With high risk events on the near term horizon (Jobs Report among others) the risk of floating into Wed/Thu seems excessive to me and I would be inclined to capture the recent gains by getting this pricing protected right now." -Hugh W. Page, Sen. Mortgage Consultant, Capital Partners Mortgage
"Mortgage bonds had a seesaw session but were able finish near the highs of the day keeping the current up trend in tact. Things will heat up later in this shortened trading week as we get the jobs report on Thursday. Floating into tomorrow if your lender did not price better after Fridays re-price but be ready to lock if you have favorable pricing tomorrow for it will be dangerous to float into the ADP report or the Jobs report." -Manny Gomes, Branch Manager, Norcom Mortgage
"ISM Manufacturing report is scheduled to be released tomorrow and the strength or weakness will likely move the market. We're on the lower side of the new range, so the risk is for a greater move upward in rates than downward. I still think we'll test the lows of this range in the near future, but if you're on a day to day lock/float watch...I'd consider locking. If you have more time, the risk to float could continue to pay off." -Brent Borcherding, www.brentborcherding.com
Today's Best-Execution Rates
- 30YR FIXED - 4.125
- 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.
- The narrow range persists even now, though due to the rate landscape from a year ago, rates were officially lower "year-over-year" on June 20th.
- (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).