Mortgage Rates Hit 4-Month Lows After Debt Deal
October 18, 2013
Market Summary
Mortgage rates bounced back this week after two weeks of losses. The first of those didn't see significant losses, but rates were beginning to worsen more quickly ahead of the debt ceiling deadline. Promise of a resolution began easing constraints in the same short term funding markets that seized up during the last debt ceiling debate. The actual passage of a deal returned them to normal levels and mortgage rates followed, stopping just slightly lower than their best levels from the last 3 weeks.
(Read More about the rate movements during the shutdown process here: Mortgage Rates Much Lower After Debt Deal)
Conforming 30yr Fixed rates (best-execution) returned to 4.25% on Wednesday and have held there since then with improvements being in the form of closing costs.
"For the past 3 weeks the focus was on the absence of the report, which caused uncertainty. With the exception of the last few days before the debt ceiling deadline, this led to a narrow interest rate environment. With the shutdown over, the jobs report will now be released this coming Tuesday. With it comes our first major cue for interest rate momentum since September 18th. "
-Matthew Graham, Chief Operating Officer, Mortgage News Daily
30 Year Fixed Rate Mortgage
Week in Review
Rates shown below are based on the 30 Year Fixed Rate Mortgage
Beginning Average:
|
4.38%
|
Ending Average: |
4.27% |
Weekly Change: |
-0.11% |
Yearly Change: |
+0.94% |
Friday, October 11, 2013 : 4.38% (+0.00%)
Mortgage rates were flat today, ending the week higher for the second Friday in a row after 3 exceptionally strong weeks in September. Some lenders offered slightly better rate sheets today when compared to yesterday's latest, though others were slightly worse off. Conforming, 30yr fixed best-execution remains between 4.25 and 4.375%. For the best qualified borrowers, 4.375% may well have no origination or discount points whereas 4.25% might. Neither option is better or worse--simply a matter of personal preference.
Tuesday, October 15, 2013 : 4.42% (+0.04%)
Mortgage rates rose moderately today, bringing them to their highest levels since September 23rd. Though the recent move higher has happened very gradually, it's also been fairly determined with none of the past five sessions seeing a move lower. Today's incremental dose of weakness was notable in that it was finally enough to unequivocally nudge 30yr fixed best-execution back up to 4.375%, though buying down to 4.25% continues to make sense for some scenarios depending on personal preference.
Wednesday, October 16, 2013 : 4.39% (-0.03%)
Mortgage rates fell today, recovering yesterday's losses on average. Some lenders' rate sheets were just slightly better or worse than yesterday's latest, but nearly every lender had been worse this morning before releasing revised rate sheets in the afternoon. 30yr fixed best-execution remains at 4.375%, though 4.25% continues to make sense for some scenarios, depending on the difference in cost from 4.375% and personal preference.
The promise of an end to the government shutdown took center stage today, helping both stocks and bonds improve vs yesterday. The full effects of a finalized deal won't be known until tomorrow, assuming the House and Senate pass the legislation tonight, as expected.
Thursday, October 17, 2013 : 4.29% (-0.10%)
Mortgage rates fell significantly today,
returning in line with the lowest levels seen in recent weeks for some
lenders. Not every lender experienced the improvement in the same way,
however, with some still not back to last week's best offerings.
Whatever the case, the average top-tier Conforming 30yr fixed rate is back to 4.25% (best-execution). Interestingly enough, the most comparable day for rate sheets is just before the start of the government shutdown.
Despite
our analysis suggesting rates didn't care about fiscal drama as much as
they cared about economic data, and despite rates making it right back
to pre-shutdown levels, the past week had seen them move higher than
they otherwise might if they truly didn't care about the fiscal drama.
And now they've moved significantly lower due to the fiscal drama
subsiding, one might wonder what gives.
Rates actually did quite a
fine job of holding steady during the first part of the shutdown, and
the sense that markets were more concerned with economic data and Fed
policy was reinforced. Indeed, the shutdown itself was of little
concern for rates. The approach of the debt ceiling, however, had a
domino effect that ended up doing some damage.
To understand the damage, we need to understand something that rarely comes into play
in a discussion of mortgage rates but is always operating silently
behind the scenes: the short term funding market. This simply refers to
the shortest term borrowing and lending that takes place in massive
quantities each day in financial markets. These are the transactions
that have shorter time windows than the 2yr Treasury notes, and range
all the way down to "overnight" maturities.
Friday, October 18, 2013 : 4.27% (-0.02%)
Mortgage rates fell only slightly today, but with yesterday already near 4-month lows, today's moderate improvement makes it official--at least in terms of closing cost. The actual interest rate that the best qualified buyers are likely to be quoted isn't any lower than the previous 4.25% (best-execution). The gains would instead be seen in the form of slightly lower closing costs, or slightly higher lender credit depending on the scenario.
Very little happened today to inspire market movement. There was no significant economic data and no surprising clues about Fed policy. Before, during, and after the shutdown, we've maintained that bond markets are most intently focused on the official Employment Situation Report.
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Today's Rates
30 Yr FRM
|
4.27%
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-0.02
|
15 Yr FRM
|
3.39%
|
-0.02
|
FHA 30 Year Fixed
|
3.98%
|
-0.02
|
Jumbo 30 Year Fixed
|
4.28%
|
-0.02
|
5/1 Yr ARM
|
3.19%
|
+0.02
|
|
Average Mortgage Rates
15 Yr. Fixed
|
3.62%
|
1.06
|
+0.18
|
30 Yr. Fixed
|
4.49%
|
1.21
|
+0.22
|
30 Yr. Fixed
|
4.46%
|
0.31
|
+0.04
|
15 Yr. Fixed
|
3.53%
|
0.31
|
+0.01
|
30 Yr. Jumbo
|
4.51%
|
0.15
|
+0.06
|
30 Yr. FHA
|
4.16%
|
0.44
|
+0.01
|
5/1 ARM
|
3.25%
|
0.31
|
+0.00
|
30 Yr. Fixed
|
4.28%
|
0.70
|
+0.05
|
15 Yr. Fixed
|
3.33%
|
0.70
|
+0.02
|
1 Yr. ARM
|
2.63%
|
0.40
|
-0.01
|
5/1 Yr. ARM
|
3.07%
|
0.40
|
+0.02
|
* 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
|
97.86
|
+0.09
|
30YR FNMA 3.5
|
102.00
|
+0.08
|
30YR GNMA 3.0
|
98.75
|
+0.16
|
30YR GNMA 3.5
|
103.00
|
+0.20
|
15YR FNMA 3.0
|
103.58
|
+0.08
|
15YR FNMA 2.5
|
100.64
|
+0.09
|
2 YR
|
0.3186%
|
+0.0043
|
5 YR
|
1.3373%
|
+0.0016
|
10 YR
|
2.5886%
|
-0.0054
|
30 YR
|
3.6559%
|
-0.0087
|
Prices as of: 10/18/2013 4:30PM EST
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