April 13, 2015
Mortgage rates didn't move much over the weekend in terms of lenders' rate sheets. Most are offering the same conventional 30yr fixed rate of 3.75% to top tier borrowers. Some of the more aggressive lenders are at 3.625%. In both cases, upfront costs were just microscopically higher today, on average.
In terms of the mortgage-backed securities (MBS) that drive lenders' rate sheets, things improved steadily throughout that day. It wasn't quite enough for most lenders to go to the trouble of reissuing rate sheets, but if these levels were to remain intact, tomorrow's rate sheets would be slightly better.
Unfortunately, tomorrow's rate sheets won't come out before the key economic data--Retail Sales at 8:30am. If the data happens to come in stronger than expected, it could put upward pressure on rates before most lenders are able to lock in the morning. That said, a worse-than-expected report also stands a chance to help rates improve.
Loan Originator Perspective
"As noted on MND last week, Fridays and Mondays have been very sedate in rate markets lately. MBS prices improved slightly during the day, but as of mid afternoon, MBS Live only showed two lenders improved their pricing. It's a relatively slow week for economic data, especially the next two days. While I don't expect huge price gains, floating (short term) seems like a lower risk than normal, given rate markets' inclination to stay in our current range." -Ted Rood, Senior Originator
"Tomorrow we get Retail Sales report. If the report is stronger than expected, rates will most likely worsen. MBS have managed to hold onto some gains today, but as of noon only a couple lenders have passed along a reprice for the better. If your lender does reprice better, and you are within 15 days of closing probably wise to go ahead and lock in before tomorrows data. I like floating everything else. If you want to float into tomorrow, do know that the economic data will be released prior to rate sheets." -Victor Burek, Open Mortgage
"Rated din't move much today but mortgage bonds did improve. We are still in a very tight range but I am liking the mortgage bond chart. If we have another up day tomorrow we may see some better pricing. I recommend floating overnight." -Manny Gomes, Branch Manager Norcom Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 3.625-3.75%
- FHA/VA - 3.25-3.5
- 15 YEAR FIXED - 3.00-3.125
- 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.
- It's 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).