April 1, 2016
Mortgage rates continued lower today, despite a fairly strong showing in the Employment Situation report. The so-called 'jobs report' is the most important piece of economic data on any given month and it always has the potential to cause big moves in rates. This time around, the data was close enough to forecast levels that it didn't have a big impact on the bond markets that underly mortgage rate movement.
Rates nonetheless managed to move significantly lower in many cases. This happened because of lenders' pricing strategies heading into today. It's uncommon for the average lender to be aggressive with rates the day before the big jobs report, especially when bond markets have been improving fairly steadily for the 2 previous weeks. Yesterday was no exception, so when markets managed to hold their recently-acquired ground today, and with the risky event behind us, lenders were more willing to adjust rate sheets to reflect recent market improvements.
The gains vary widely by lender, but on average, 3.625% is now the most prevalent rate quote for top tier conventional 30yr fixed scenarios.
Loan Originator Perspective
"If you floated into today’s payroll report…well done. The rate sheets I have seen are slightly better than the final rate sheets from Thursday. It seems a new trend might be beginning. As long as 1.80 can hold on the benchmark 10 year note, I would float over the weekend. If this trend can continue, you will be well rewarded." -Victor Burek, Churchill Mortgage
"As I suspected, February's NFP report, released this morning, had negligible affect on rates today. International growth concerns are controlling the market for now, and we're establishing a new treasury range (currently at 1.788%). Until something changes, the trend is our friend, and floating borrowers may see improved pricing. As always, if you're close to closing, don't have room to risk a higher rate, lock first, ask questions later." -Ted Rood, Senior Originator
Today's Best-Execution Rates
- 30YR FIXED - 3.625
- 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 HAD been leaning toward locking since March 1st, which has proved to be a very solid strategy, but began to reconsider starting the 3rd week of the month. We've been more open to the idea of floating since then, as long as you're setting a stop-loss level somewhere overhead, meaning you'd lock to avoid further losses if markets move against you.
- 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).