September 28, 2016
Mortgage Rates finally took a break from their recent winning streak today. While there are a few lenders whose rates are just a hair lower than yesterday's, most are slightly higher. Moreover, bond market weakness in the afternoon prompted several other lenders to issue mid-day reprices to even higher rates. Of course, all of the aforementioned movement is exceptionally small in the bigger picture, but it does fit the bill of being the first push back against 6 solid days of improvement. That's the sort of thing that could be taken as a sign to lock if you've been waiting for an opportunity.
On an outright basis, rates remain close to all-time lows with the average lender quoting 3.375% on top tier, conventional 30yr fixed scenarios. There are still a few lenders at 3.5% but they're a small minority--at least when it comes to high down-payment/equity, high credit score rate quotes.
Loan Originator Perspective
Treasuries have been faring well over the last few days, but MBS prices haven't really followed the move. Maybe they're running out of room? With the exception of July 2016, mortgage-backed-securities have only been better in 2012 & 2013. With that being the case, I heavily favor locking loans within 45 day closing timetables. Remember, the 10 YR is the benchmark of the broader bond market, but doesn't necessarily dictate MBS movement. Even if the 10 YR yield dips further, we may not see mortgage rates improve. Even if they do improve, it might not be enough to justify floating when we're already trading at some of the best levels EVER. -Gus Floropoulos, VP, The Federal Savings Bank
Rate markets sold off in late PM action today, amid abundant comments from various Fed members. My rate sheets today showed marginal improvement over yesterday's. I'm not expecting significant more short term gains or losses. If you've floated into the last week's pricing improvement, may be time to take your money off the table and lock up your gains. Either way, pricing seems content where it's at, and that's certainly something we can all live with. -Ted Rood, Senior Originator
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).