May 4, 2016
Mortgage rates moved lower for the 6th day in a row today, bringing them in line with the best levels in more than a month. It should be noted, however, that the first half of April was almost perfectly flat in terms of rate sheet fluctuations, so there's essentially no difference between today's rates, and one of any number of days from April 5th-19th. At current levels, the most prevalent conventional 30yr fixed rate quote is 3.625% for top tier scenarios and a few of the most aggressive lenders are already back down to 3.5%.
Recent history suggests limited incentive for waiting to lock when rates are in this range. Not only that, but any time that we manage to string together so many successive days of improvements, we usually end up with at least a temporary bounce in the other direction. In the bigger picture, it seems that rates are consolidating between February's lows and March's highs. Once we break out of that pattern, rates could begin changing more quickly.
Loan Originator Perspective
"Bonds are holding onto the recent gains of the last few days. I still believe that lenders are holding back as we do have employment data hitting on Friday. If you can tolerate the risk and afford to be wrong, I would continue to float. However, if you are happy with today's pricing there is nothing wrong with locking as that removes all risk." -Victor Burek, Churchill Mortgage
"Trading in the current range is great. Anything sub 1.84 may warrant locking. Heading into the end of this week's monthly employment numbers can be tricky, usually the numbers matter sometimes they don't. The trend is your friend." -Constantine Floropoulos, VP, The Federal Savings Bank
"Bonds posted small gains today while waiting for Friday's NFP jobs report. Both Treasury yields and MBS prices have broken their 25/50/100 day moving averages, which is typically a bullish sign. My conservative side says "lock up the gains, get while the getting is good", while my risk taking side says "we could improve from here, wait a while." At any rate, the biggest float/lock decision is tomorrow, for now, floating overnight carries minimal risk." -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 have seen only brief episodes of volatility in a low, narrow range.
- Some of the forces that had been helping rates are now at risk of reversing course. Namely, stocks and oil have been trying to break higher and European bond markets bounced near all-time lows.
- After being "lock-biased" for several weeks, a window of opportunity may be opening up after the Fed avoided sending any clear warnings about a June rate hike. We'll reassess the broader trend by the end of the week.
- 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).