March 30, 2015
Mortgage rates fell moderately to begin the week, but haven't yet returned to recent lows. Even so, the improvement is a relief considering rates had only just begun fighting back against a big move higher that happened on Wednesday and Thursday of last week. Friday then offered a glimmer of hope and today keeps hope alive. That said, upcoming events could make for some more volatility, especially after tomorrow. It's not safe to assume that rates will continue to fall in the short term.
3.75% remains the most prevalently-quoted conventional 30yr fixed rate for top tier scenarios. Most of the lenders that moved up to 3.875% last week are now back down to 3.75% and a few of the most aggressive lenders are offering 3.625%, but the vast majority are at 3.75%.
As for today's events, things were generally quiet. This morning's economic data had little effect on trading levels in the bond markets that influence mortgage rates. As alluded to above, that should begin to change on Wednesday as harder-hitting data begins to come out. It's almost always the case that rates can react positively or negatively to important economic data. The farther away from expectations the data is, the bigger the move can be in rates. The leading example of this phenomenon is the Employment Situation Report, which has no equal in terms of market moving potential. It comes out this Friday morning.
Loan Originator Perspective
"With the improved pricing we are seeing this morning, I think it might be wise to start thinking about locking short term closings. This is non farm payrolls week, and we typically worsen heading into the report. However, this is also month/quarter end which typically supportive of fixed income securities such as treasuries and MBS. I think you might be safe floating overnight, but I wouldn't expect there to be much to gain. If you do plan on locking this week, I think today or tomorrow will be the right time." -Victor Burek, Open Mortgage
"Mortgage Bonds held there own today in the face of a huge equity rally. Normally such a large increase in stocks would create selling in mortgage bonds but that was not the case today. Mortgage bonds however were not able to push above tough resistance and until that happens floating can be dangerous. Take into consideration your risk tolerance and if risk adverse there is enough market moving data to make your stomach turn. Those who can tolerate large market swings and more importantly are not closing for 30 days out or longer can consider floating." -Manny Gomes, Branch Manager Norcom Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 3.75
- FHA/VA - 3.5
- 15 YEAR FIXED - 3.125
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- 2015 began with a strong move to the lowest rates seen since May 2013. The catalyst was Europe and the introduction of European quantitative easing.
- With European QE having now begun, we're on high alert for a big picture bounce in European economic data, sentiment, growth, and rates. The more it looks like such a bounce is taking hold, the greater the risk that domestic bond markets and mortgage rates will also experience a big bounce higher. There was a possibility that the bounce occurred in February, but European bonds got back to the task of improving in March. This has helped calm the domestic bond market's move toward higher rates.
- While more immediate, bigger-picture disaster has been averted, it's still a highly uncertain time for global financial markets. On the one hand, some believe we're in the midst of a race among world central banks to devalue currencies and lower interest rates. Others believe that the global economy is turning a corner and rates will grind higher. That creates a lot of volatility, and volatility is bad for mortgage rates. One result is that they have a slightly harder time keeping pace with movement in Treasuries. That can be good or bad, depending on which way markets are moving. The other result is that there really is no way to be sure that today's rates will be available a few hours from now. They could get better or worse, but the point is that there's more change and movement in the mortgage market so far in 2015.
- 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).