July 13, 2016
Mortgage rates moved just slightly lower today, following a fairly abrupt spike over the first two days of the week. This the sort of movement that neither confirms or rejects the possibility that early July marked long-term lows. Instead, it's a push--an abstention from that more serious decision. It's much better than at least one alternative, to be sure. Specifically, if rates had continued higher today, they would have crossed key levels that suggested more upward momentum. Conversely, rates didn't fall enough to rule out the possibility that we'll simply cross those levels tomorrow or in the near future.
All of this is a bit melodramatic considering outright levels. Those are still very close to all-time lows with 3.375% remaining the most prevalently-quoted conventional 30yr fixed rate on top tier scenarios. Perhaps that outright lowness, itself, justifies some melodrama though. In other words, we have this precious thing, and it would be a shame to lose it.
Loan Originator Perspective
"Like yesterday, I continue to favor floating. New supply of treasury debt is out of the way and we have nice support over head that should prevent any major moves for the worse." -Victor Burek, Churchill Mortgage
"Bonds hung tough today, with 10 year yields in 1.47% range. We've avoided breaking resistance at 1.53%, which is highly encouraging. Rates are back in "wait and see" mode, but on the right side of the yield fence. Until we get a definitive move, whether up or down, hard to say where this goes. I'll cautiously float most new applications, but if treasuries break 1.53%, that stance will change in an instant." - Ted Rood, Senior Originator
Today's Best-Execution Rates
- 30YR FIXED - 3.375%
- FHA/VA - 3.25%
- 15 YEAR FIXED - 2.75%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- Markets had been primarily concerned with the timing of the Fed's second rate hike (after they first hiked in December 2015)
- The possibility that the U.K. would vote to exit the European Union (Brexit) has since taken over as the biggest flashpoint for markets.
- The Fed freely admits it didn't hike in June because of this and because it wants to be sure that jobs numbers aren't taking a bigger turn for the worse. Mortgage rates moved farther into 3-year lows as a result.
- Brexit happened and rates rejoiced. Lock if you like what you see. The longer term trend remains positive regardless, but periodic corrections toward higher rates continue to be a risk.
- 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).