March 11, 2016
Mortgage rates moved slightly higher again today, pushing farther into the highest territory since late January. Today's move wasn't that big, in and of itself. The problem is the frequency with which these moves higher are occurring. In fact, rates have only moved lower on one occasion this month.
In outright, historical terms, things could still be much worse. The most prevalently-quoted conventional 30yr fixed rates remain in the high 3's, with most lenders quoting either 3.75 or 3.75% on top tier scenarios. Even in relative terms, that's not too much higher than the 3.5% to 3.625% range that was available in mid February. The problem is the pervasive trend in an unfriendly direction. Until and unless that trend is defeated, it makes more sense to plan on it continuing as opposed to hoping it ends.
Loan Originator Perspective
"Rates continued their steady march higher today as both stocks and oil move higher. I am not a fan of locking on Friday's but the trend is the trend until it isn't, so locking today could be the right call. I am confident that rates will move again lower, but the timing of that move is in question. At some point, oil traders are gonna realize we have way too much oil and are producing still way too much oil, so oil prices will fall which will help take bond yields with them." -Victor Burek, Churchill Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 3.75-3.875%
- FHA/VA - 3.25-3.5%
- 15 YEAR FIXED - 3.00
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- The Fed finally hiked on December 16th, causing fears of rising rates in 2016.
- But global financial markets came into the new year in distress. Now markets aren't even convinced that we'll see another Fed rate hike in 2016. Major stock indices plummeted around the world, and investors sought shelter in the bond market. When investor demand for bonds increases, rates fall.
- We were left with much lower mortgage rates despite the Fed having just begun its hiking cycle. This paradoxical trend can continue as long as global market turmoil fuels a demand for safer haven investments. A big bounce in oil/stock prices could mean trouble for rates--at least temporarily.
- As of March 1st, stock markets look like they're at least attempting to get back toward higher levels. Mortgage rates have been pressured higher accordingly. While we're well off the lows seen in early February, we're still in very low territory historically--low enough that it wouldn't make sense to second-guess a decision to lock, even though there's still a possibility that the longer-term trend toward lower rates could continue.
- 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).