Mortgage Rates Back to Pattern of Volatility

Interest Rates

Apparently, we jinxed the market
yesterday by referring to recent stability… 
Apologies on that, but the damage is minimal…   Mortgage Rates worsened slightly as trading in the secondary mortgage market and beyond
grew increasingly volatile.  Best-Execution
offerings may be the same or slightly higher than yesterday, but if the rate
remains the same, closing costs will likely have increased.

Chalk the market
volatility up to the situation in Europe and the impending summit this weekend
(but then there’s another summit as early as 10/26?)  Is anyone sure what’s going on?  And if they are, do markets know how they feel
about that? 

The answer
is “apparently not,” and the volatility is the clue.  For now, we have to expect it to continue
indefinitely.  That’s why you’ll see a
more “locky” leaning in the guidance below.

 Today’s Rates: 

  • BESTEXECUTION 30YR FIXED –   4.125% almost 4.25%
  • FHA/VA
    More 3.875% today, 3.75% still out there for some.
    –  Mostly 3.5%
  • 5 YEAR ARMS –  low
    3% range, huge variations from lender to lender.

Ongoing Guidance While Best-Ex Is At
Or Below 4.25%: 

 New Guidance:
Markets are poised to move in either
direction.  While we’re encouraged by rates’ recent ability to draw a line
in the sand at 4.25%, we can’t rule out upside risks from European headlines or
domestic economic surprises.  Back to ping pong mode…  At least this should be familiar, considering
the numerous recent moves toward and away from the edge of the above graphic at
4.25%.  But with the increased volatility
in the outlook, we’d lean more toward locking, EVEN THOUGH that volatility can
swing both ways.  It’s just that the
risks that pricing can move far enough away from the current market that a deal
might not even be feasible afterward. 
Normally, we approach floating as a calculated risk based on the
assumption that if the float doesn’t pan out, we can plan on only losing an
eighth in rate.  But when the potential
losses move beyond a mere .125% and with Best-Execution in the low 4’s, risks
begin to outweigh benefits.  The
possibility that rates get lower in spite of the increased disposition to lock
is part of the frustration of  dealing
with volatility.  But better safe than

Remember that any mention of
floating really only applies to those scenarios who are flexible enough to run
the risk of paying more closing costs, a higher rate, or potentially losing a
deal altogether.  All others shouldn’t really try to beat the market when
rates are as close as they are to all time lows. 

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