August 21, 2014
Mortgage rates ended a 3-day losing streak, moving modestly lower today. This wasn't the case in the morning, but several lenders released positively-revised rate sheets in the afternoon. As such, some lenders still have slightly higher rates compared to yesterday, but the average is slightly lower. This leaves 4.125% intact as the most prevalently-quoted conforming 30yr fixed rate for top tier borrowers. 4.25% is still common and 4.0% remains a bit of a stretch, but is available to some borrowers willing to pay the extra up front costs.
The markets that underlie mortgage rates moved paradoxically today. Economic data was stronger than expected, which typically pushes rates higher. There were other factors in play today that outweighed the impact of the economic data. In addition, such data isn't always as simple as it's main headline might suggest, and several of the reports had valid counterpoints to the positivity beneath the surface.
In the bigger picture, rates are still fairly close to their best levels of the year. The widely followed Freddie Mac rate survey came out today, showing this week's rates are the lowest of the year. Keep in mind that this is only the case for their survey, which is limited due to the time-frames that it covers. In general, it will only be conveying quotes from Monday through Wednesday. Interestingly enough, the best days of the year for rates have been a Thursday and a Friday. In particular, rate on the morning of May 29th completely crushed anything else in 2014.
Loan Originator Perspective
"Nice bounce back today despite some economic data which was pretty good on the surface, but questionable in the details. We have no economic reports tomorrow that can move the markets, but Fed Chairperson Janet Yellen is set to make a speech at the Jackson Hole Conference at 10am which can definitely move the markets. With MBS well into positive territory on the day and the lack of reprices for the better from lenders, i think floating overnight is worth the risk. But be ready to lock early tomorrow in case Yellen is bullish, but i think she will continue to be a bear and rates react positively to her speech." -Victor Burek, Open Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.125
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.25%
- 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).