Mortgage Rates moved slightly higher today after falling sharply to new all-time lows yesterday. The end result is rates that are still noticeably lower than those seen last week and in some cases, not that far off from yesterday's offerings. Best-Execution for 30yr Fixed Conventional loans remains firmly at 3.5% with some lenders arguably at 3.375%.
(Read More:What is A Best-Execution Mortgage Rate?)
Rather than attribute their movement to any domestic events today, bond markets mostly attended to the task of keeping an eye on the European crisis, and additionally were sorting out trading positions after Monday's record levels. Incidentally, both Treasuries and MBS (the Mortgage-Backed-Securities that most closely influence mortgage rates) hit record levels again today.
Unfortunately, MBS prices are not the only determining factor for rates. One reason we're not seeing even lower rates today is that the improvements in the bond markets unfolded gradually throughout the day. The morning hours were actually weaker than yesterday and lenders have been slow to adjust their rate sheets for the gains. Moreover, as we've mentioned recently, lenders simply can't continue to lower rates without allowing for an opportunity for the capacity of their operations to catch up to demand. There are other considerations as well, but the capacity issue is one of the big ones at current rate levels.
Long Term Guidance: We'd continue to advocate against trying to "get ahead" of current market movements due to the high degree of uncertainty. In the past, we would have interpreted that advice as a suggestion to lock, but in the recently "low and sideways" environment, it's probably better-read as a suggestion to go with the flow of gradually lower rates until we see the pattern definitively break. It's a reasonably safe assumption that European concerns will generally continue to apply downward pressure on rates although there are no guarantees that the right piece of news or economic event couldn't mark "the turning point" at which rates bottom out. On any given day, rates have been at or near all-time lows and in the grand scheme of things, unable to move lower as quickly as Treasuries for example. So although there is potential gain from floating, it's still a historically excellent time to lock if you'd prefer to take the risk off the table.
Loan Originator Perspectives
Kent Mikkola, Mortgage Loan Officer, NMLS 353976
Customers who float have seen gains from their original quote, but it is an individual choice as to whether the risk is worth the reward.
Victor Burek at Benchmark Mortgage
I continue to favor floating until you are within 15 days of closing. MBS have rallied nicely today and many lenders still owe us a reprice better. If your lender repriced better and you are within 15 days, i would lock..if your lender hasn't repriced better today, i would float until tomorrow.
Bob Van Gilder (BVG) Finance One Mortgage
Well, well, well. Rates remain in a sideways, albeit, historically low pattern. Greed kills.
Consantine Floropoulos, Quontic Bank
The theme is a broken record here. Closing in the next 30 days should lock without hesitation. Closing in 60 days out should consider locking, however time is on your side. In the event that rates spike (and they will) the likelihood of capturing these rates in the time frame needed to close is unlikely. Pigs get fat, hogs get slaughtered....don't be greedy.
Today's BEST-EXECUTION Rates
- 30YR FIXED - 3.5%, Some Approaching 3.375%
- FHA/VA - 3.25-3.5% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED - 2.75 - 2.875%
- 5 YEAR ARMS - 2.625-3. 25% depending on the lender
Ongoing Lock/Float Considerations
- Rates and costs continue to operate near all time best levels
- Current levels have experienced increasing resistance in improving much from here
- Rates could easily move higher or lower, but given the nearness to all time lows, there's generally more risk than reward regarding floating
- But that will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn't always mean they're done improving.
- (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario. There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).