Mortgage Rate Volatility Suddenly Vanishes
July 19, 2013
Market Summary
Mortgage rates end the current week at their best levels, after moving gently lower on 4 out of 5 days. The absence of volatility was striking. Whereas the average daily change in rates was 0.078% last week, this week was only 0.03%. When adjusted for costs, the average rate fell 0.09% from last Friday with almost half the improvement present on Monday. The damage done by July 5th's .30% rise is now finally undone as far as rates are concerned and 30yr Fixed best-execution is now solidly back at 4.5%.
"Whereas last week looked like it was open to the possibility of a more pronounced consolidation following the July 5th rout, this week proved it. We have to take it with a few grains of salt as markets were thinly staffed and volume below average. All that means is that we're flying a holding pattern and it happens to be a comfortable one. Things could still get bumpy for better or worse with next week's data, but the biggest movement is likely reserved for the following week."
-Matthew Graham, Rates Strategist, 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:
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4.50%
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Ending Average: |
4.41% |
Weekly Change: |
-0.09% |
Yearly Change: |
+0.88% |
Friday, July 12, 2013 : 4.50% (-0.04%)
Mortgage rates didn't manage the same sort of surge lower as that seen yesterday. In fact, some lenders were unchanged, but on average, rates fell to their lowest levels of the week. Most of the positivity came courtesy of overnight movement in Europe and Asia. This started the day for rates off on a strong foot and although mid-day weakness prompted many lenders to hike rates a bit, the worst of the adjusted rate sheets were still at least as good as yesterday's. That means the 30yr fixed best-execution rate remains at 4.625%. Most of the improvements were seen in the form of lower borrowing costs. At this point, we're closer to moving down to 4.5% than up to 4.75%.
Monday, July 15, 2013 : 4.46% (-0.04%)
Mortgage rates moved lower to start the week, adding on to last week's solid recovery from 2yr highs a week before. As expected, rates took their most meaningful cue from today's Retail Sales report, which was weaker than forecast. This was a benefit to Treasuries and MBS (the "mortgage backed securities" that most directly affect rates) even before lenders put out their first rate sheets of the day. Lenders still aren't very unified in their movement from the previous session's rate sheets, but most improved enough to suggest that 4.5% is now sharing some of the best-execution space with 4.625% for conventional, 30yr fixed loans. Also of note is that the costs associated with "buying down" a rate from from 4.5 to 4.25% are worth considering. This makes for much higher closing costs, but on average, those costs are recouped in around 60 months based on today's rate sheets.
Tuesday, July 16, 2013 : 4.45% (-0.01%)
Mortgage rates held almost perfectly steady today. Any lenders that offered noticeably different rates were generally in slightly lower territory, but this was barely enough to equate to 0.01 percent of movement on average. Trading activity in MBS ("mortgage backed securities" that most directly influence rates) was exceptionally stable for a second day in a row. The stability suggested that markets were moving into position yesterday and holding that ground today in anticipation of tomorrow's important Bernanke Testimony. Conventional 30yr fixed best-execution remained between 4.5 and 4.625% percent.
Wednesday, July 17, 2013 : 4.41% (-0.04%)
Mortgage rates improved moderately today, making it back to levels not seen since July 3rd. That makes today something of a symbolic victory as July 3rd was the last trading day before rates swung roughly a third of a point higher in one fell swoop on Friday July 5th. Conventional 30yr fixed best-execution is now down to 4.5 percent on average though several lenders are competitively priced at 4.25 - 4.375 percent. This doesn't necessarily mean that one lender will have the same closing costs at 4.5 as another would at 4.25 (though that is roughly the range between the best and worst), simply that it may make financial sense to some borrowers to pay more closing costs in exchange for a lower rate.
Thursday, July 18, 2013 : 4.44% (+0.03%)
Mortgage rates rose modestly for the first time in 6 business days today. For most lenders, the movement was far from abrupt, and although it won't affect yesterday's quoted interest rates for most borrowers, it may increase the closing costs required to obtain those rates. the closing costs on those quotes. Conventional 30yr fixed best-execution remains at its newly acquired level of 4.5 percent. Lenders continue to be stratified, meaning that pricing varies more than average between lenders and even in cases where two lenders may be in similar territory on one rate, the costs to move between rates can be quite different. For instance, using a $200k loan as an example, one lender might only charge $1100 to move from 4.5% to 4.375% whereas another might be just over $1600.
Friday, July 19, 2013 : 4.41% (-0.03%)
Mortgage rates were slightly lower this morning, but many lenders offered improved rate sheets as the day progressed, bringing average just barely below the lows of the week. The lows were achieved only in terms of closing cost for most lenders. In other words, the most prevalent 30yr fixed quote for top-tier borrowers (best-execution) remains at 4.5 percent on average, and simply costs slightly less in terms of closing costs (or returns slightly more if you're not paying any). Lenders continue to be stratified, meaning that pricing varies more than average between lenders and even in cases where two lenders may be in similar territory on one rate, the costs to move between rates can be quite different. For instance, using a $200k loan as an example, one lender might only charge $1100 to move from 4.5% to 4.375% whereas another might be just over $1600. Buying down to 4.375 or 4.25% can good sense in some cases.
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Today's Rates
30 Yr FRM
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4.41%
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-0.03
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15 Yr FRM
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3.62%
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-0.03
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FHA 30 Year Fixed
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4.25%
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+0.00
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Jumbo 30 Year Fixed
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4.50%
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-0.03
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5/1 Yr ARM
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3.23%
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-0.03
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Average Mortgage Rates
15 Yr. Fixed
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2.80%
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1.17
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-0.23
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30 Yr. Fixed
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3.58%
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1.37
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-0.19
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30 Yr. Fixed
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4.68%
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0.42
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+0.00
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15 Yr. Fixed
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3.70%
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0.38
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-0.06
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30 Yr. Jumbo
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4.81%
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0.40
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-0.05
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30 Yr. FHA
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4.38%
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0.22
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+0.01
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5/1 ARM
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3.39%
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0.37
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-0.01
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30 Yr. Fixed
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4.37%
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0.70
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-0.14
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15 Yr. Fixed
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3.41%
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0.70
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-0.12
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1 Yr. ARM
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2.66%
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0.40
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+0.00
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5/1 Yr. ARM
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3.17%
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0.60
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-0.09
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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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97.63
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+0.58
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30YR FNMA 3.5
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101.30
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+0.47
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30YR GNMA 3.0
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98.52
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+0.42
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30YR GNMA 3.5
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102.23
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+0.44
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15YR FNMA 3.0
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102.83
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+0.31
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15YR FNMA 2.5
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100.03
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+0.31
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2 YR
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0.3023%
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-0.0083
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5 YR
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1.2980%
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-0.0344
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10 YR
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2.4821%
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-0.0519
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30 YR
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3.5594%
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-0.0744
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Prices as of: 7/19/2013 4:28PM EST
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