Borrowing Costs For Record Low Rates Crept Higher Today

Interest Rates

After several days at record lows with little deviation in borrowing costs, Mortgage Rates worsened somewhat today.  The weakness, however, does not affect the 3.875% Best-Execution rate; the borrowing costs involved in obtaining that rate are merely higher. 

Although there was stronger economic data on the home-front this morning, the real market mover continues to be Europe.  Lately, another major consideration is that the will of the markets is immediately felt due to low year-end volume.  

Please make sure to read the
“important rate disclaimer” at the bottom of the page in considering
what “all-time lows” means.  The issue of “buckets” as described in the
lock/float considerations below, remains a factor that may prevent rates
and/or fees from moving significantly lower in the short term.


  • 30YR FIXED –  3.875%
  • FHA/VA -3.75%
  • 15 YEAR FIXED –  3.375%
  • 5 YEAR ARMS –  2.625-3.25% depending on the lender

Lock/Float Considerations

Yesterday, we voiced some concern about the record levels and low volume:

The expectation for this week’s low volume, combined with record
levels in loan pricing is a potential risk factor.  The lower a market’s
volume, the more weight carried by those who participate meaning that
it takes fewer trades/less money to move things around.  With respect to
benchmark Treasuries, it seems traders are more willing to ride the
wave of lower rates as opposed to swim against it.  Buyers outnumber
sellers, but in an environment where volume is this low, that can change
fairly rapidly, and if it does, Mortgage-Backed-Securities could take
some damage. 

Beyond that, the incentive to float with rates at all-time lows is
fairly limited, especially considering that further improvements are
likely to be hard-fought and slow in coming due to the MBS Buckets
considerations discussed in last week’s posts:

Although we’re no longer looking at record levels today, the themes remain: low volume, higher volatility, and European considerations trumping domestic data.  There are plenty of risk factors ahead in the coming days including details on today’s lending operation in Europe.  That hits tomorrow morning before most lenders release rate sheets, so if it has a negative effect on interest rates, there wouldn’t be any time to react tomorrow.


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