July 7, 2014
Mortgage rates didn't move today. Some lenders were slightly higher or lower compared to Thursday, but only in terms of closing costs, and only by very small margins that averaged out to zero net change. That leaves rates at their highest levels in nearly a month. The movement during that time, however, has been subdued with day-to-day changes limited mostly to closing costs for rates of 4.125-4.25% for the best-case scenarios.
The past week saw a decided shift up to 4.25% with Thursday's weakness simply increasing closing costs and confirming 4.25% as the most-prevalently quoted conforming 30yr-fixed rate for ideal scenarios. That naturally remains the case with today's 'unchanged' rate sheets. 4.125% is much less likely today, but it wouldn't take too much improvement to get it back for some lenders. 4.375% on the other hand, is farther from from consideration and would require another week of moderate losses before becoming more commonly quoted.
Loan Originator Perspective
"Rates were for the most part unchanged today as no further sell off from Fridays jobs report impacted the bond market. Mortgage bonds remained fairly flat for most of the session today. We are now at the top end of the rate range. That combined with bonds holding Fridays levels makes floating into tomorrow a pretty easy call to make." -Manny Gomes, Branch Manager, Norcom Mortgage
"Quiet day in the markets today and shaping up to be a fairly quiet week with little in the way of economic data releases to push us around. Short timers to closing need to seriously think about locking in now as significant downward movement is not likely. Might as well protect what's available now. If you have a longer time horizon, floating may payoff and risks are probably minimized for now but keep in tune with the markets and your loan officer as things can change quite quickly and unexpectedly." -Hugh W. Page, Sen. Mortgage Consultant, Capital Partners Mortgage
"If you have been floating since last week, MBS have regained all of the losses following the huge beat on the jobs report. Pricing; however, is just a little worse than the day before the jobs report hit, about .125 in price. With rates still holding in our range, but toward the top half, I continue to favor floating all loans." -Victor Burek, Open Mortgage
"Last week's selloff came to a merciful end today as rates were flat. We're now back at the higher end of recent ranges, which may indicate potential room for improvement. It's a slow week data wise, so would be a surprise to see dramatic gains or losses. Float/Lock decisions now more personal preference, as always, if you like your pricing, locking is the no-risk option." -Ted Rood, Senior Mortgage Planner, tedroodteam.com
"I'd strongly consider floating, but I would also be ready to lock at any notice. The 10 yr Treasury is at the top of the range that's held for the last 2 months and I'm given hope it will continue to hold since last weeks' NFP report didn't force us higher through the range. Right now, if the range holds, we'll see rates trend slowly lower but again, be ready to lock." -Brent Borcherding, www.brentborcherding.com
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 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).