November 30, 2015
Mortgage rate drama has been on an unapologetic, no-holds-barred, "couldn't-care-less" sort of vacation for the past 2-3 weeks. There have only been microscopic changes from day to day, and they've canceled each other out over that time frame to boot! In other words, there has been no net change in rates since the middle of November. The past 3 business days (Wed, Fri, and today), have been especially calm. Not every lender kept the same hours during that time, and not every lender held perfectly steady, but there certainly wasn't enough movement to affect the most prevalently-quoted conventional 30yr fixed quote of 4% on top tier scenarios.
The recent calm runs the risk of building a false sense of security. There are several important events on the horizon that could get things moving again. Granted, rates can move in either direction depending on the nature of events, but the important point is not to be caught off guard if they move quickly higher. The events in question--important employment data at home and the European Central Bank Announcement--will occur during the last 3 days of the week. The potential impact of the events will ramp up during that time, culminating in Friday's Employment Situation report.
Loan Originator Perspective
"Weak data and month end bond buying has helped rates improve this morning. The weak data will not take the FED of course from hiking next month. I do fear that we might lose ground tomorrow with a new month starting and the Employment report due in a few days. I think it would be wise to lock in today. Wait until as late as possible as some lenders have repriced for the better already today." -Victor Burek, Churchill Mortgage
"Today closes out the month of November and it has been a very uneventful month for rates meaning there have not been many sharp moves higher or lower for rates. We did see a slow grind lower in rates the second half of the month and today may be a good day to take advantage of that slow grind. There is major market moving data on the horizon and the risk of floating increases sharply." -Manny Gomes, Branch Manager Norcom Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.0%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.25%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- 2015 has been largely about rates rising unevenly from a long-term low brought about by the onset of quantitative easing in Europe. In May and June, the Fed increasingly began telegraphing a 2015 rate hike. At that point, the "rising rate environment" seemed like a sure thing, but the Fed's plans hit several snags. Economic data began deteriorating at home and abroad, causing markets to rethink the higher rate rhetoric. Mortgage rates hit 6 month lows at the end of October, just as the Fed surprisingly changed it's policy statement to specifically suggest December as a rate hike possibility (something they haven't done since 1999).
- In the bigger picture, rates had been at a crossroads, trying to determine if they would move back to 2015 highs or if the late summer swoon was merely the first wave of a longer campaign.
- While there is still plenty of room to be concerned about increasingly weak global economic growth, that's not a solid enough reason to float in this environment. With the Fed almost certainly on track for a December rate hike, there is much more risk that rates move quickly higher vs quickly lower. The big picture global malaise can serve as the basis for long term hope, but in the short term, assume upward pressure on rates when formulating your strategy.
- 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, conventional 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).