August 31, 2016
Mortgage Rates were unchanged today, ending a month without much movement in general. In fact, the most prevalently quoted conventional 30yr fixed rate on top tier scenarios remained in a range of 3.375-3.5% for more than 45 days! That's the sort of absence of volatility that greatly decreases the need to stress out about locking or floating your rate, but as always, the question is whether or not that will continue to be the case.
Near-term volatility in rates can come from the economic data over the next two days. Markets are anxious to see if it will support the Fed's case for hiking rates in the upcoming meeting. In general, the stronger the economic data, the greater the probability that the Fed hikes. Although the Fed doesn't directly control mortgage rates, if the probability of a hike increases, mortgage rates would likely increase as well.
Loan Originator Perspectives
Rates remain in a tight range. Although there are further rumblings from our European neighbors and continued bouncing in equities, if you have the opportunity to lock the rate of a lifetime, why not?? -Robert Van Gilder NMLS 815819,263112
Rates were (you guessed it) flat again today, as traders prepared for Friday's August's NFP report. We're locked in one of the tightest ranges I can remember, which makes it easier for secondary desks to price aggressively, but the bigger questions are when the range breaks, and in which direction. It wouldn't surprise me if markets shrug off NFP, but in the event they don't, I don't want to be floating and miss our current phenomenal pricing. My September pipeline is locked, most of October's isn't, since those clients have longer to recover any knee jerk reactions to Friday's numbers. -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).