Following Friday’s employment data, Mortgages Rates
moved quickly higher. In most cases, the changes were seen not in the quoted interest rates themselves, but rather in the closing costs required to obtain those rates. A small number of lenders’ Best-Execution rates rose to 4.0%, but a majority stayed at 3.875%. (learn more
about how we calculate Best-Execution in THIS POST).
For a given interest rate, there are a range of costs at which it could still be a best-execution candidate. Whereas Friday basically took these costs from the low side (about as low as they’d even been) to the high side, today’s improvements serve to moderate that movement back toward somewhat of a middle ground. In another way of looking at things, you could think of the past three days as 3.875% best-ex rates being in question on Friday afternoon, but are “safe” once again, at least for today.
Indeed, “safety” is a relative term. All we can ever truly know is what rates are available on the day we’re looking at them. Even then, rates can change several times a day. They don’t usually do this more than once a day, but it does happen. While we don’t necessarily expect any violent movements in the near future, we can’t ever rule out potential volatility. In that regard, we can at least identify the events and possibilities that could stand as the culprits for such volatility, in the same way we prepared for Friday’s jobs report as a high-risk event.
Of the high risk events this week, some are scheduled while others are not. The key scheduled events are the US Treasury auctions this week, particularly the 10yr auction on Wednesday and the 30yr auction on Thursday (these two are more pertinent to the MBS–or “Mortgage Backed Securities”–market which most closely governs mortgage rates). The other “potential event,” is a lingering LACK of resolution to an ongoing debate between Greece and it’s bond-holders to determine whether or not Greece will receive it’s next lump of bailout funds or face default. It’s actually this uncertainty (Greece defaulting would be bad, economically speaking) that’s helping rates bounce back from Friday’s jobs data.
Today’s BEST-EXECUTION Rates
- 30YR FIXED – 3.875% mostly, less 3.75 today, 4.0’s getting closer
- FHA/VA -3.75%
- 15 YEAR FIXED – 3.25%
- 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
- There are technical reasons for that as well as fundamental reasons
- Lenders tend to get busier when rates are in this “high 3’s” level
and can throttle their inbound volume by raising rates or costs.
- While we don’t necessarily think rates are destined to go higher,
given the above facts, there seems to be more risk than reward regarding
- But that will always be the case when rates
operating near historic lows
- (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).