September 4, 2014
Mortgage rates ended the day fairly well mixed between higher and lower compared to yesterday. This is heavily dependent on the lender in question as some were noticeably stronger or weaker while others were relatively unchanged. The stratification is a direct result of recent market volatility, which has picked up as we move through some important events. These include the European Central Bank's policy announcement earlier this morning as well as some of the bigger economic reports coming out today and tomorrow. The bottom line is that it's left 4.125% intact as the most prevalently-quoted conforming 30yr fixed rate for top-tier scenarios.
The volatility continues tomorrow with the release of the Employment Situation Report at 8:30am; the most important economic report of any given month. If there's any big reaction to the data, it will be apparent well before lenders put out their first rate sheets of the day. Therefor, if you're not locked today, you run the risk of losing a fair amount of ground, though there's always the possibility of improvements as well.
Loan Originator Perspective
"Draghi disappoints again, with all talk and no action causing rates to worsen. With that out of the way, all eyes are now focused on the employment report due out tomorrow at 8:30am. All indicators are pointing toward another pretty solid report. It is always risky to float through this data, so if you are within 30 days of closing you should strongly consider locking today and those within 15 days should definitely lock today and remove all risks." -Victor Burek, Open Mortgage
"I said to lock yesterday, heading into multiple days of market moving data, and now we're at the greatest risk, in some time, to see a move higher in rates. Locking still remains the best option, in my opinion, to confidently know that you can secure a rate at these levels. Tomorrow we have NFP (largest market mover of most months) and a HUGE number could really take the direction of rates higher, quickly." -Brent Borcherding, brentborcherding.com
"So, the ECB dissappointed markets with Draghi announcing a less than expected plan for dealing with EU problems. Details are still to come (and that's part of the problem) but mortgage pricing suffered today as bond investors sold the news. We held below a ceiling that if broken may portend even higher rates but with the Jobs Report tomorrow I think it makes sense to take risk off the table with short term closings and lock in these rates. Beyond the short term it's a tough call. Check your risk tolerance." -Hugh W. Page, Mortgage Banking Officer, Seacoast National Bank
"Rates increased a bit today after the release of the ADP data. Traders are positioning themselves ahead of tomorrow NFP report. Should the numbers beat we will see rates increase further. However if the number come in below expectations we could actually see rates decrease. One thing is for certain and that is if you are conservative in nature you want to be locked in today before tomorrow morning roller coaster ride." -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).