July 9, 2014
Mortgage rates improved again today, but it wasn't exactly a straight line to success. In fact, the underlying bond markets that directly impact lenders' rates began weakening yesterday afternoon and didn't really stop until after today's Fed Minutes ('weakening' implies higher rates).
That means that this morning's rate sheets were actually a bit higher than yesterday's latest. After the Fed released the Minutes from its most recent meeting, bond markets improved further. This allowed most every lender to release improved rate sheets late in the day. Those took the day-over-day change into positive territory and helped 4.125% gain back some territory from 4.25% as the most prevalently-quoted conforming, 30yr fixed rate for top-tier scenarios.
Loan Originator Perspective
"Mortgage bonds started the day off a bit to the downside putting a little pressure on rates. The sell off continued after the poor 10 year treasury auction. Bonds finally mounted a really and pared their looses after the Fed minutes which revealed members are split on the decision on when to hike rates. With rates near the top of of the range it still makes sense to float and see if we can find the bottom end of the range again. " -Manny Gomes, Branch Manager, Norcom Mortgage
"We're still within the intermediate term range we've been in for awhile but the recent improvements in pricing are encouraging. I don't think we have confirmation yet that the move lower will likely continue so short term closings should be locked up here. Those with longer term closings need to take stock of their tolerance for risk and stay connected to your mortgage professional. Complacent consumers may get burned." -Hugh W. Page, Sen. Mortgage Consultant, Capital Partners Mortgage
"I have favored floating since last Wednesday for everyone that missed locking before the payrolls data. If you followed that advice, todays pricing is the best we have seen since Tuesday. Weak data out of Europe and continued issues around the world(Ukraine, Iraq and now Israel) have all contributed to the improvements we saw today. If your lender reprices for the better today, and you are within 15 days of funding, you should consider locking. I think everyone else should continue to float if you can tolerate the risk." -Victor Burek, Open Mortgage
"Nice rally mid afternoon following the Fed minutes. We regained overnight losses, and now sit towards the lower end of our recent rate range. I'd love to see a continued rate move lower, but no guarantees there." -Ted Rood, Senior Mortgage Planner, tedroodteam.com
Today's Best-Execution Rates
- 30YR FIXED - 4.125- 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).