March 8, 2016
Mortgage rates moved lower today, regaining a good amount of the ground lost over the past few days. The average lender rate sheet is back in line with those seen last Wednesday. While that leaves 3.75% as the most prevalent conventional 30yr fixed rate quote, it brings several of the more aggressive lenders back down 3.625% on top tier scenarios.
Bond markets (which underlie mortgage rate movement) were active today, with strong gains in the morning resulting in several lenders offering mid-day improvements. Gains faded in the afternoon, prompting a few lenders to adjust rates slightly higher. There were no significant economic events to motivate today's rate movement. Rather, investors are shuffling their trading positions ahead Thursday's important policy announcement from the European Central Bank. Today's improvements are a welcome sight, but in the current environment, we should hold out for more gains before abandoning a generally defensive strategy. Bottom line, there's still a risk that today's positivity is merely a byproduct of recent negativity, as opposed to an organic source of positive momentum.
Loan Originator Perspective
"After a rough start to the month of March bonds made a comeback today to get back under the important level of 1.84% on the US 10 year bond. So where do we go from here? Not much as far as economic reports this week. The ECB meets on Thursday and that could shake things up. Being at this level is still like being in purgatory. Arguments to head in both directions can’t be ignored. But after decent improvements today if you’re closing soon, it might be a good idea to lock and move on. No guarantees either way currently. " -Jeff Anderson, Loan Officer, Salem Five Mortgage, LLC
"Bonds had nice day today thanks to continued global growth fears. Some lenders have passed along some of the gains, but with the recent weakness, we will need to hold ground before we get all the gains. So I like floating overnight and check your pricing in the morning." -Victor Burek, Churchill Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 3.75%
- 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).