September 2, 2014
Mortgage rates were higher today, ending nearly a week and a half of modest improvements. While no individual day stood out during that time, the combined effect took rates extremely close to their lowest levels of the year. Had today moved in a more friendly direction, some lenders would be at 2014 lows. Instead, we remain in the same narrow range that's characterized the past 4 months. The most prevalent conforming 30yr fixed rate quote is unchanged at 4.125%, but the closing costs would be higher than they were on Friday.
Whereas last week's day to day changes were exceptionally small, things could be getting more volatile this week. That said, volatility would be relative to that calm baseline. So we're not talking about the risk of 4.125 quickly becoming 4.375% or 3.875--simply that closing costs for prevailing rates could be moving more than they recently have. Thursday and Friday are the focal points for potential volatility.
Loan Originator Perspective
"For a short work week, it is action packed with the most important data coming on Thursday and Friday. Thursday we get the ECB meeting where rate shoppers are hoping Draghi talks about their version of QE and on Friday we get the ever so important jobs report. Floating through those events is extremely risky." -Victor Burek, Open Mortgage
"Some upbeat economic data started our week off with slightly higher rates. Ukrainian Drama may take a back seat to US data, particularly Friday's NFP jobs report. It's not unusual to see rates creep up the week of NFP as investors fear a growing US economy will lead to quicker Fed rate hikes. It would take a very weak report, or some serious EU reaction to Russia's "incursion" to take us back to last week's levels. For the moment, all but the most risk tolerant borrowers may want to lock up their pricing." -Ted Rood, Senior Mortgage Planner, tedroodteam.com
"Mortgage bonds are giving up some gains today as better than anticipated economic data was released this morning. We have a lot more market moving data this week which will make for very volatile sessions. Risk vs reward now favors locking." -Manny Gomes, Branch Manager, Norcom 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 are now lower year-over-year, but that's mostly due to rates' path higher in 2013. The current path in 2014 remains sideways, though it has recently approached (but not broken) the lows set in late May
- European markets continue to play a prominent role, 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. The most prevalent top tier rates haven't changed since mid May
- 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).