November 2, 2016
Mortgage Rates eased just a bit more today, marking the 4th day of relative stability after a sharp rise last Thursday. Although there was a Fed announcement today, and although Fed announcements are typically capable of causing massive market movement, it was a relative non-event this time around. Instead, the modestly positive interest rate environment came courtesy of ongoing uncertainty surrounding the presidential election.
Of course the Fed announcement very easily could have caused a big move in rates, had it contained any significant surprises. For instance, if the Fed opted to raise rates today, or to firmly comment on a potential December rate hike, things could have been different. Instead, they made only small changes--the kind that could be used by either side to argue the odds of a rate hike next month.
With the possible exception of Friday's jobs report, bond markets (which dictate rate movement) will continue focusing on the election.
Loan Originator Perspective
As expected, today's Fed statement contained no "November surprises", as the Fed Funds Rate held steady. Bonds posted decent gains in response, and (at least for a day or so) our rising rate trend is on pause. My pricing improved about 40 bps the past two days, which is certainly a step in the right direction. If you're floating, I'd probably look at tomorrow's pricing, then make the call on locking before NFP report Friday AM. -Ted Rood, Senior Originator
I am not convinced that the trend has broken, but we might have some cracks. Seems the market is much more worried about a Trump victory over data or the Fed. With the plethora of stories of a tightening Presidential race, I think floating overnight is worth the risk. -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).