July 19, 2016
Mortgage rates were sideways in some cases today, and very slightly lower in others, making for one of their better performances over the past few weeks. During that time, they've generally been moving higher following early July lows (which were very close to all-time lows). In more specific terms, lenders are quoting 3.375% to 3.5% on top tier conventional 30yr fixed scenarios, a range that's roughly an eighth of a point higher versus early July.
In terms of bond market trends (which drive rate trends), the past two weeks would be considered a 'correction'--an inevitable but necessary move that restores some balance between buyers and sellers (of bonds) before the next imbalance arises. Days like today lead us to consider the possibility that the correction is ending. After all, we were moving higher and now we've held steady for a few days. But in reality, we're simply waiting to see what the next imbalance looks like. Reason being: it will take a more determined move back toward lower rates to officially end the current correction.
Loan Originator Perspective
With the exception of loans closing within the next 10 days, I am floating the balance of my pipeline. The trade up was quick, and I'd like to see how it plays out over the next couple of trading sessions to determine if this was just an organic move in the big picture, or a decisive move higher..... -Constantine Floropoulos, VP, The Federal Savings Bank
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
- In the biggest of pictures, "global growth concerns" remain the driving force behind the long-term trend toward lower rates
- Amid that trend, periodic corrections toward higher rates can and will happen. These can happen for no apparent reason, or they can be brought on by changes in expectations surrounding central bank policy at home and abroad, as well as geopolitical and systemic risks
- Time horizon and risk tolerance are 2 variables to consider when it comes to locking. If you have plenty of time and don't mind losing some ground, set a limit as to how much higher rates could go before you'd lock to avoid further losses, and then float in the hopes of never seeing that limit.
- In the shorter-term, it's always good to look for lock opportunities after rates have been moving lower or sideways repeatedly, especially if they've since begun to move back up in any sort of consistent way.
- 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).