March 18, 2016
Mortgage rates didn't move much today, but of the lenders with noticeable differences versus yesterday, most were just slightly lower. That means we're ending the week at the best levels as rates have battled back against the aggressive uptrend that began in March. While we're not quite back to the lower rates seen earlier in the month, the average conventional 30yr fixed quote is still well below 4.0 percent, with the average lender at 3.75% on top tier scenarios.
In terms of strategy, we're in a tough spot here. Until the past few days, it was a much easier call to assume that the move higher in rates would continue until we had clear evidence that the move was over. Now the question becomes: is this enough evidence? Analytically speaking, we're right on the edge when it comes to most mathematical models. Even then, rates don't always behave as the math suggests they will. Bottom line: there's more room for risk takers to take risks now, but with the understanding that any move back to recent highs in rates should be taken as a warning that the longer term pain might continue.
Loan Originator Perspective
"Rates dropped slightly today, as our three day rally rolled on. MBS have gained almost 75 bps since Wednesday morning, an impressive pace that puts us back with March's best levels. I'm willing to ride this wave a while, would love to see it end up with treasuries (currently 1.87) back at their 1.71 level from late February. Will we make it there? Stay tuned, this could get exciting!" -Ted Rood, Senior Originator
Today's Best-Execution Rates
- 30YR FIXED - 3.625-3.875%
- 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).