December 6, 2016
Mortgage rates barely budged today, with most lenders offering the exact same quotes as yesterday. While we have seen a few days with similar day-over-day results recently, most of those involved intraday 'reprices' (i.e. lenders changing rates in the middle of the day in response to market movement). Today was the first day since the election with almost no reprices and where nearly every lender made the same move (anywhere from "sideways" to microscopically lower in rate).
4.125% is the most prevalent conventional 30yr fixed rate on top tier scenarios with 4.25% not too far behind. 4.0% is a distant third.
The lack of volatility could be due to Thursday's scheduled announcement from the European Central Bank (ECB). In short, this is the world's first likely opportunity to hear the ECB confirm plans to wind down its asset purchases--a move that would be analogous to the Federal Reserve's comments preceding the 2013 taper tantrum. In the current case, markets have done much more to prepare for European tapering, but the announcement could nonetheless cause volatility for rates.
Loan Originator Perspective
Mortgage rates have been a bit quiet today following the last two days of semi-volatility. Overall this may look like a good sign, but we are still in an uptrend. Rates are forming higher highs, and higher lows, and this is just not a good sign for us. Defense is the only play, if you have a clear path to closing, locking in makes the most sense. Tomorrows announcement from the head of the European central bank may have a potential benefit for rates, but it may not, and based on the reaction to the referendum from Italy this weekend I would say very little is likely to help us until Mr. Trump is in office. Remember the current trade that pushed rates higher was in connection to our new elected president and the theoretical policies that he may bring that would cause inflation. -Gus Floropoulos, VP, The Federal Savings Bank
Rates were eerily flat today, literally staying in as narrow of range as I can remember seeing. Traders may be waiting for the ECB's Thursday policy statement, which should provide clues on their future stimulus policy. At least we're not seeing daily losses now, so the worst of the post election rate swoon may be over. I'm still leaning towards locking sooner rather than later, but wouldn't argue if an informed client chose to float. We'll take unchanged rate sheets, sure beats the last several weeks! -Ted Rood, Senior Originator
Today's Best-Execution Rates
- 30YR FIXED - 4.125-4.25%
- FHA/VA - 4.0%
- 15 YEAR FIXED - 3.375%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates had been trending higher since hitting all-time lows in early July, and exploded higher following the presidential election
- Some investors are increasingly worried/convinced that the decades-long trend toward lower rates has been permanently reversed, but such a conclusion would require YEARS to truly confirm
- With the incoming administration's policies driving a large portion of upward rate momentum, mortgage rates will be hard-pressed to make significant improvements until after Trump takes office. Rates can move for other reasons, but it would take something big and unexpected for rates to move appreciably lower.
- We'd need to see a sustained push back toward lower rates (something that lasts more than 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).