Mortgage rates began moving lower last Thursday and since then have fallen every single day, crossing into new all-time lows in the process. Today simply continues that trend and makes for newer, slightly lower all-time lows. We began in neutral territory but market improvements throughout the day led several lenders to reprice for the better.
Despite the overall gains, you might not see the same thing today, depending on your lender. This has to do with the roll-out of increased Guarantee Fees (read more HERE). Many lenders have already priced these increases into their rate sheets, but for instance Wells Fargo, the nation's largest mortgage lender, took their "G-Fee" hit today for lock timeframes of 30 days
Even before the positive reprices in the afternoon, Best-Execution rates for 30yr Fixed Conventional Loans was already holding the new territory reached yesterday of 3.375%. Depending on the lender, viable quotes exist at even lower rates. Considering that Best-Ex was at least 3.5% heading into last week's Fed Announcement and that Treasuries are actually HIGHER it should be clear that QE3 has had an unequivocally positive effect on mortgage rates so far.
(Read More:What is A Best-Execution Mortgage Rate?)
Long Term Guidance: While the recently high degree of uncertainty remains very much intact, the Fed's decision to specifically target Mortgage-Backed-Securities in a third round of Quantitative easing provides a supportive undertone for mortgage rates. We'd still advocate not trying to get too far ahead markets. In other words, we wouldn't try to guess how low or how high rates might go before changing course. For now, the trend is supportive and positive for rates, but we're watching it closely for the same sort of paradoxical responses that occurred in 2010. Things look different this time around, but a lot of that has to do with Europe. Rates remain near all time lows and risks of volatility remain high. Those factors suggest that you stay vigilant regarding the day-to-day swings in mortgage rates. If you're floating, set a limit as to how high rates would have to go before you cut your losses and locked. Similarly, set a target of how low rates would have to get before you lock.
Loan Originator Perspectives
Julian Hebron, Branch Manager, Loan Agent, RPM Mortgage
Strong locking bias for purchases and refinances, with one caveat: we do the work first, then lock. If clients are purely rate shopping and unwilling to let us properly pre-approve them before locking, we won't lock them. More on this here: Refi Roadmap: A Locked Rate Isn't A Closed Loan.
Mike Owens, Partner with HorizonFinancial, Inc.
Rates look very good and I'm still sticking to floating for the short term. However locking is not a bad thing either.
Today's BEST-EXECUTION Rates
- 30YR FIXED - 3.375% - 3.5%
- 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
- 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).