July 21, 2014
Mortgage rates moved just barely lower in most cases today, though some lenders were unchanged or slightly higher. It was a slow start to the week as far it concerns the financial markets that underlie rate movements. There were no significant economic reports and markets generally moved in unison based on geopolitical headlines (i.e. stock prices and rates moved higher and lower together).
With the limited movement, 4.125% remains the most prevalently-quoted conforming 30yr fixed rate for top tier scenarios. Any changes in quotes over the weekend would only affect the closing costs, and even then, they'd be minimal. This also means that rates are staying well-inside a narrow range over the past two months, though they're nearer the lower end of that range at the moment. While further improvement can't ever be ruled out, the last few times rates have been this low have all been good opportunities to lock.
Loan Originator Perspective
"We started of the week rallying into better mortgage pricing only to sell off a bit as the afternoon went on. We're sort of at a critical juncture in rates sitting near the floor of where rates have drifted down to but I think we need to move lower through this level to confirm this momentum to lower rates and to confirm a floating bias. So, short term closings (less than 15 days) should strongly consider locking here. Longer term closings can probably maintain a wait and see position until we get more confirmation on direction." -Hugh W. Page, Sen. Mortgage Consultant, Capital Partners Mortgage
"I think locking is a safe and sound approach today. We're at or near the lows on the 10 yr for the last 3 months and unless we get data to help continue a move lower, the next move would be upward from within the range. Take your gains, lock and be happy!" -Brent Borcherding, www.brentborcherding.com
"Increased Geo-Political tensions which normally help rates to push lower are not having that effect on the markets. If rates are not moving lower they may be remaining at low levels due to the Geo-Political tensions. If this is the case rates can move up in a hurry should tensions ease considerably. Any way you look at it floating is a but risky at the moment." Manny Gomes, Branch Manager, Norcom Mortgage
"Geopolitical risk continues to hold rates down but the benchmark 10 year note doesn't like the weather below 2.47. Rates today are about as good as they have been in about a month. My recommendation is to lock in if you are within 15 days of closing and longer term closings might want to consider locking as well. The problem with floating based on geopolitical tensions is that the tensions can ease and all the recent gains can be taken away quite quickly. Conditions in Ukraine and Palestine will probably have to worsen for rates to move lower in the near term." -Victor Burek, Open Mortgage
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 hallmark of 2014 so far has been a disconcertingly narrow range in rates. Too many market participants bet on rates going higher in 2014, and markets have punished that imbalance with a paradoxical move lower.
- As of June, rates were officially lower year-over-year, but that's due to rates' path higher in 2013. The current path in 2014 remains sideways.
- European markets continue to play a nagging role in the background, generally helping rates in the US remain lower than they otherwise might be.
- From a wider point of view, we're in limbo, waiting for the first significant move away from the narrow range. A rally into late May stood a chance to act as this break, but rates have since returned to what were previously the lower limits of the 2014 range.
- As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.' Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy. It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).