Mortgage rates move lower again today following last week's Brexit headlines (the U.K.'s vote to leave the European Union).  Indeed it's hard to turn on the TV, computer, or radio without hearing about Brexit.  Global financial markets are still in the throes of the "initial reaction" time frame.  That means selling stocks and buying bonds.  When investors buy bonds, rates fall--albeit at a bit slower pace for mortgage rates compared to other popular rate benchmarks (like 10yr Treasury yields).  

There's no telling how long this "initial reaction" period will continue and what the longer term effects will be, but for now, the short term effects have been strongly positive for rates.  The most prevalent conventional 30yr fixed quote is still 3.5% on top tier scenarios, but 3.375% gained a lot of ground today.  With just a bit more improvement, the average lender would be at 3.375% for the first time since early 2013.  This is also the lowest stably-maintained rate we've ever recorded (there were scattered instances of 3.25% back in 2012).

Loan Originator Perspective

"Rate sheets continue to improve thanks to the ongoing drama in Europe.  I still believe that rate sheets are not reflecting all of the recent gains, for that reason I would float overnight.  Right now data doesn't matter, its all about Europe and that drama will continue."  -Victor Burek, Churchill Mortgage

"Friday's treasury/MBS' gains demonstrated world markets' Brexit concerns, and today's continued strength confirmed them: the "Smart Money" is betting that economic conditions globally will worsen due to Brexit.  Rate sheets improved again today, and as yields continue to drop, secondary managers will become more willing to price aggressively.  This is NOT a short term panic situation, it's a serious global concern that will play out over months/years, not days/weeks.  I am strongly in the float camp, and that's not typical.  Those close to closing may want to wait as long as possible to pull the lock trigger, because until something big changes, the trend is our friend." -Ted Rood, Senior Originator

Today's Best-Execution Rates

  • 30YR FIXED - 3.5%
  • FHA/VA - 3.25%
  • 15 YEAR FIXED - 2.75%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • Markets had been primarily concerned with the timing of the Fed's second rate hike (after they first hiked in December 2015)
  • The possibility that the U.K. would vote to exit the European Union (Brexit) has since taken over as the biggest flashpoint for markets. 

  • The Fed freely admits it didn't hike in June because of this and because it wants to be sure that jobs numbers aren't taking a bigger turn for the worse.  Mortgage rates moved farther into 3-year lows as a result.
  • Brexit happened and rates rejoiced.  Lock if you like what you see.  The longer term trend remains positive regardless, but periodic corrections toward higher rates continue to be a risk. 
  • As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.'  Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy.  It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).