March 28, 2016
Mortgage rates were decidedly mixed today, depending on the lender. Some were in better shape compared to last Thursday (markets were closed on Friday) while others were decidedly worse. Most of the differences between lenders can be explained by last week's pricing strategies heading into the holiday weekend. Bond markets were under pressure on Thursday afternoon. That typically means lenders will be increasing rates and putting out new rate sheets in the middle of the day. Indeed, that happened in quite a few cases on Thursday. Other lenders simply left the morning rate sheets intact, and they're the ones who moved to higher rates today, effectively getting caught up with the rest of the market.
In and of itself, today was mildly positive, but didn't do much to affect the big picture. In fact, the big picture has been relatively unchanged for most of the month despite a brief scare 2 weeks ago. Now, the events in the rest of the week could serve as the motivation for rates to move away from their recent sideways trend, depending on what the economic data and news suggests about the Fed's likely policy path. The Fed Funds Rate doesn't dictate 30yr fixed mortgage rates, but any change in Fed policy can and will send shockwaves through the entire interest rate spectrum. The catch is that those shockwaves could either be positive or negative for mortgage rates.
Loan Originator Perspective
"I favored floating over the long weekend, and I continue to favor floating today. Bonds are enjoying a nice rally, but the rate sheets I am viewing do not reflect the gains. I would float overnight, and evaluate pricing in the morning. " -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 markets began the new year with rates moving surprisingly lower. Major losses in stocks and oil prices were part of the same trend of investors moving away from risk.
- After bottoming out fairly close to all-time lows in February, rates began to rise somewhat sharply in March as market panic subsided and as the Fed signaled it would probably still hike rates in 2016--just not as quickly as anticipated.
- It remains to be seen whether markets can continue to move in this risk-friendly direction (read: bad for rates, good for stocks). Stocks have yet to break out of a gradual downtrend that began in mid-2015. If they do, it could keep pressure on rates to continue higher.
- We've been leaning toward locking since March 1st, which has proved to be a very solid strategy. The 3rd week in March is the first time that it made much sense to reconsider that strategy, but we still haven't seen enough of a turnaround to pull the trigger firmly. In other words, risks remain that rates are in the earlier stages of a longer term trend higher.
- 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).