October 28, 2016
Mortgage Rates recovered slightly today, after hitting the highest levels in nearly 5 months yesterday. Unfortunately, that leaves today's rates with the dubious distinction of "2nd highest in nearly 5 months." It continues to be the case that lenders won't be eager to offer major improvements on rate sheets, even if underlying bond markets improve.
In other words, the current dynamic between market movement and mortgage rates is different than the norm. When bond markets are more stable, and especially when they're not in the midst of a trend toward higher rates, lenders are more willing to adjust rates sheets such that they're keeping logical pace with market movement. Right now, however, lenders have to be cautious about the risk that bond markets continue to weaken. They want to see a bigger, more sustained push back toward lower rates in bond markets before they'll pass along meaningful reductions on mortgage rate sheets.
Loan Originator Perspective
With the news regarding the investigation into Hillary Clinton’s email use, I like floating over the weekend. Lenders will be slow to pass along any improvements especially with today being Friday. Not sure if you will see substantial gains on rate sheets come Monday, but floating does get you closer to your close date and you may be able to lock on a shorter term which offers better pricing. -Victor Burek, Churchill Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 3.625%
- FHA/VA - 3.25-3.5%
- 15 YEAR FIXED - 2.875%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates have generally been trending higher since hitting all-time lows in early July
- Clearly-defined uptrends provide higher-than-average motivation to lock
- Risk-takers can try to time the dips in rates that may occur during that broader uptrend, but the reward for good timing generally isn't worth the risk in these situations.
- We'd need to see a sustained push back toward lower rates (something that lasts more than 1-3 days) before anything less than a cautious, lock-biased approach makes sense for all but the most risk-tolerant borrowers.
- 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).