August 22, 2016
Mortgage Rates were almost imperceptibly lower today, although underlying bond markets improved more noticeably. Why would rates not be more improved then? Part of the reason is the timing of Friday's market movements and lender rate sheet release times. Markets deteriorated after most lenders posted rates on Friday, but few lenders went to the trouble of raising rates during the day. Lenders that held steady on Friday would have likely posted higher rates today. But because of the market improvement, they were able to stay in line with Friday's offerings or improve just slightly.
Later in the week, we'll hear from Fed Chair Yellen at Jackson Hole. This is one of those events that has high POTENTIAL to cause market movement, but not necessarily a guarantee. Between now and then, rates are more likely to remain in the narrow range that has dominated for more than a month. Specifically, conventional 30yr fixed rates on top tier scenarios are most frequently being quoted at 3.375-3.5%.
Loan Originator Perspectives
Another day in the range. We are lucky to be in the current range as rates are exceptionally attractive. Floating into the next few days may prove to be beneficial, but unless we see a substantial move out of the current range, with confirmation, I would still recommend locking in all loans with a 30 day window to close. -Constantine Floropoulos, VP, The Federal Savings Bank
I continue to favor cautiously floating right now. Bonds have managed to regain all of Friday's losses, but I don't quite see those improvements passed onto rate sheets. Floating overnight allows lenders time to pass along the improvements and gives bonds a chance to break through our current floor. -Victor Burek, Churchill Mortgage
Bonds rallied slightly today, and several lenders issued PM rate sheets with improved pricing. Yes, we're still in recent ranges, but at least we're trending towards the lower end of this range. The wild card this week is the economic summit at Jackson Hole, WY. Chairwoman Yellen's concluding comments have the potential to shake up bond markets, we'll find out on Friday when the summit concludes. -Ted Rood, Senior Originator
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).