Mortgage Rates Continue Gradual Recovery, with Notable Exceptions
January 18, 2013
Market Summary
After rising to their highest levels since summer, mortgage rates have managed a slow, but mostly steady recovery. During the first week of 2013, the Best-Execution rate for an ideal 30yr Fixed, Conventional loan, rose to 3.5% from a range of 3.25% to 3.375% previously. Most mortgage lenders offer rates in .125% or 1/8th increments. After hitting those highs, rates began edging toward 3.375% last week, but continued to share the stage with 3.5%.
Despite pausing the trend of improvement after last Thursday's European Central Bank Announcement, rates continued the gradual move lower, making it back to 3.375% territory this week.
Things seemed to be calming down on Wednesday, but Thursday brought a major dose of volatility and although rates didn't make it back to the highs earlier in the month, they did have their worst day since. Best Execution returned to 3.5%, but the weakness ebbed on Friday, lowering costs to obtain that rate.
"While US mortgage rates aren't based on European markets, important events overseas affect the entire market," explains Matthew Graham, Rates Strategist at Mortgage News Daily. Though the epicenter of market movement resulting from European headlines is naturally in European markets, US bond markets, including MBS (the "Mortgage-Backed-Securities" that most directly influence rates), still feel the effects. So when the European Central Bank left rates unchanged and ECB President Mario Draghi gave a generally upbeat press conference, global stock markets rallied, European interest rates moved sharply higher. Mortgage rates were mostly unharmed by European events last week, but this week we saw them team up with positive economic data in the US and the result was a quick move higher for mortgage rates."
30 Year Fixed Rate Mortgage
Week in Review
Rates shown below are based on the 30 Year Fixed Rate Mortgage
Beginning Average:
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3.45%
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Ending Average: |
3.50% |
Weekly Change: |
+0.05% |
Yearly Change: |
-0.42% |
Friday, January 11, 2013 : 3.45% (-0.01%)
With respect to rate sheet offerings from lender to lender, there are a few notable outliers at the moment. Year-end/New-year pricing strategies as well as lenders' responses to last week's volatility have made for a higher-than-normal degree of stratification. Some lenders are "business as usual," adjusting rate sheets in the same proportion to market movements as they were in November/December. Other lenders progressively became more conservative and continue to lag the rest of the pack when markets are improving and to raise rates quicker when markets are deteriorating.
Monday, January 14, 2013 : 3.43% (-0.02%)
Mortgage rates improved moderately to begin the week, bringing most lenders back to levels not seen since January 2nd or before. Following the Fiscal Cliff "mini-deal," FOMC Minutes, and Employment Report two weeks ago, rates rose at to their highest levels since before the Fed announced it's most recent buying program for MBS (the "mortgage-backed securities" that most directly influence rates) in mid September. The Best-Execution rate for Conventional 30yr Fixed loans is back down to 3.375% for most lenders, though some still linger at 3.5%.
Tuesday, January 15, 2013 : 3.42% (-0.01%)
Mortgage rates improved slightly on Tuesday, extending their recent streak of improvements to 7 days. The calm movements in rates reflect a generally calm underlying market today. That's a somewhat interesting development considering the events on the calendar last night and this morning tend to connote more activity. In fact, markets were reasonably active, but that activity took place within fairly narrow trading ranges. The mortgage-backed-securities (MBS) that most directly influence rates, began the day stronger vs yesterday (stronger = lower rates). Though they gradually weakened into the afternoon, they never dipped into yesterday's levels.
Wednesday, January 16, 2013 : 3.43% (+0.01%)
Mortgage rates were higher on average on Wednesday, though some lenders didn't move with the rest of the pack. On one end of the spectrum, a few lenders were unchanged vs yesterday, but the bigger deviations from the pack were at the other end where several lenders moved rates significantly higher from Tuesday's latest offerings. Those, however, are the exception to the rule as the average lender was just slightly higher in cost today with Best-Execution remaining at 3.375% for Conventional 30yr Fixed loans.
Thursday, January 17, 2013 : 3.50% (+0.07%)
Mortgage rates shot higher on Thursday matching the quickest pace of the past several months seen at the beginning of January. Although rates didn't make it quite as high in absolute terms, much of the recent recovery was erased. In other words, we're now closer to early January's levels than we are to yesterday's levels. The move was more than sufficient to bump Best-Execution for Conventional 30yr Fixed Loans up to 3.5% from the previous 3.375%. Some borrowers may still have the same rate today vs yesterday, but in those cases, borrowing costs would be significantly higher, in some cases over one half of one percent of the loan balance.
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Today's Rates
30 Yr FRM
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3.50%
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+0.00
|
15 Yr FRM
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2.83%
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+0.00
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FHA 30 Year Fixed
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3.25%
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+0.00
|
Jumbo 30 Year Fixed
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3.71%
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+0.01
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5/1 Yr ARM
|
3.01%
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-0.01
|
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Average Mortgage Rates
15 Yr. Fixed
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2.81%
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1.00
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-0.10
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30 Yr. Fixed
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3.54%
|
1.24
|
-0.08
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30 Yr. Fixed
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3.61%
|
0.41
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+0.09
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15 Yr. Fixed
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2.88%
|
0.39
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+0.02
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30 Yr. Jumbo
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3.78%
|
0.38
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+0.03
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30 Yr. FHA
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3.35%
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0.69
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+0.01
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5/1 ARM
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2.64%
|
0.37
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-0.01
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30 Yr. Fixed
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3.38%
|
0.70
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-0.02
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15 Yr. Fixed
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2.66%
|
0.70
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+0.00
|
1 Yr. ARM
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2.57%
|
0.40
|
-0.03
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5/1 Yr. ARM
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2.67%
|
0.60
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+0.00
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* FHFA averages are updated monthly. ** Mortgage Bankers Association (each Wednesday) and Freddie Mac (each Thursday) averages are updated weekly.
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Secondary Markets
30YR FNMA 3.0
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104.09
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+0.14
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30YR FNMA 3.5
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106.00
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+0.11
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30YR GNMA 3.0
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105.11
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+0.11
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30YR GNMA 3.5
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107.97
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+0.05
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15YR FNMA 3.0
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105.19
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+0.03
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15YR FNMA 2.5
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104.02
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+0.03
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2 YR
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0.2543%
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-0.0113
|
5 YR
|
0.7661%
|
-0.0258
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10 YR
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1.8452%
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-0.0351
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30 YR
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3.0339%
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-0.0358
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Prices as of: 1/18/2013 3:54PM EST
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