September 21, 2016
Mortgage Rates made modest gains in some cases today, though many lenders are in roughly the same territory as yesterday. Things could be worse, however, considering we had 2 major announcements from central banks today (Japan overnight and the Fed this afternoon). These are always flashpoints for market volatility, but they don't always deliver on their threats.
Today was something in between calm and volatile. Most of the volatility was seen in financial markets with very little making it through to mortgage lenders' rate sheets. Fortunately, the market volatility was in our favor today, as underlying bond markets improved following the Fed announcement. Bond market improvement connotes lower mortgage rates.
Several lenders saw enough improvement in bond markets to adjust pricing in the afternoon, but the gains weren't big enough for the average lender to go to the trouble of reissuing rate sheets. In such cases, and assuming bond markets hold these gains overnight, lenders would have a bit of extra room to offer lower rates tomorrow morning. Keep in mind, however, that assuming that "all things will be equal" on the following business day is a crapshoot in financial markets. Today went better than it might have gone, but not so well that we can conclude the recent push toward higher rates is over.
Loan Originator Perspective
Following the FOMC announcements, bonds have improved to their best levels in about a week. There is quite a bit of volatility, so lenders will be very slow to pass along any improvements. Based on that, I favor floating overnight. -Victor Burek, Churchill Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 3.5%
- 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).