April 21, 2016
Mortgage rates picked right up where they left off yesterday: pushing into the highest levels of the month. This week has seen the fastest rise in rates since early March. If we lose any more ground tomorrow, it could end up being the worst week since early November 2015. Of course with the average rate still in the 3.625-3.75% range, it's hard to draw any overly-dire conclusions about rates in general, but borrowers who were rate shopping as recently as 2 days ago should be aware their quotes have likely changed.
In terms of average rates, today's weakness has resulted in a more even distribution between 3.625% and 3.75% in terms of conventional 30yr fixed quotes for top tier scenarios. In cases where borrowers are still being quoted the same note rates as 2 days ago, the effective rates are likely higher. In most cases, this will either mean higher upfront costs or a lower lender credit.
If you haven't locked yet, be aware that the current momentum toward higher rates is the strongest since early March. Then, as now, it doesn't make much sense to bet against that momentum until it has leveled-off or reversed course.
Loan Originator Perspective
"Rates continued yesterday's ascent today, as pricing declined again. We've broken some well-established ranges in both treasuries and MBS, which leaves the door open for rates to rise further. Anyone within 30 days of closing should probably be locked, or at least aware rates are trending higher. My April/May closings are all locked, and will continue to look at locking early until momentum shifts back. The trend is NOT our friend at the moment." -Ted Rood, Senior Originator
"Rate sheets have been beaten up the last couple days. I think at this point, the damage has been done. If you can tolerate the risk and afford to be wrong, I would float over the next couple days and see what next week brings. But as always, if you are happy with your current offer, nothing wrong with locking." -Victor Burek, Churchill Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 3.625%-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 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 now broken out of a downtrend that had been helping rates remain low and we are beginning to see the big picture shift in market sentiment putting upward pressure on rates.
- We had been more open to the idea of floating since the March 16th FOMC Announcement and rates generally fell from there through April 19th. But they're now threatening to move higher again, and locking is a safer bet until such a move can be ruled out.
- 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).