August 19, 2016
Mortgage Rates moved modestly higher today, but remain in an excruciatingly narrow range in the bigger picture. Actually, there's nothing too excruciating about it, unless you're trying to find something interesting to say about day-to-day rate movement. Otherwise, it's actually fairly pleasant that such a boring, persistent range has taken shape fairly close to all-time lows.
In terms of conventional 30yr fixed quotes on top tier scenarios, the best we've ever seen was a range from 3.125%-3.25% on a few days in late 2012. We did manage to spend a few days back at 3.25% in early July 2016, but since then, this new range rests between 3.375% and 3.5%. In other words, rates have held for more than a month at levels that are a mere quarter point higher than the all-time lows that only held for a few days. Ergo, unless you happen to be one of the lucky few that could get an application in during those brief opportunities, today's rates might as well be all-time lows. Congrats!
The narrowness may be coming to an end next week. There's never a guarantee about future market movement, of course, but lots of investors are looking at next week's Jackson Hole symposium (a big fireside chat with the Fed where the sitting Chairperson often gives a slightly less cryptic outlook for the near-term path of rates) as the moment that rates will have to pick a side of the range and move in that direction for a while. Granted, the Fed Funds Rate does not directly affect mortgage rates, but if markets suddenly see greater chances of a Fed rate hike based on something Yellen says as Jackson Hole, mortgage rates would likely opt to move higher.
Loan Originator Perspectives
Yesterday was a decent day to lock in, all things considered. I would be skeptical of locking into today's weakness on a Friday, but again things can get very ugly very quickly. I will recommend not locking in today, but only because I locked in the majority of loans closing inside of 30 days yesterday. Have a great weekend. -Constantine Floropoulos, VP, The Federal Savings Bank
The benchmark 10 year note is flirting with breaking the range to the top side this morning. If the 10 year holds below 1.59, I would float over the weekend. If that breaks, I would look to lock today. -Victor Burek, Churchill Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 3.375 - 3.5%
- FHA/VA - 3.0 - 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).