Mortgages Rates were eerily quiet over the past 3 sessions, but they broke that streak today to move lower. The Conventional 30yr Fixed Best-Execution Rate remains at 4.0%, with the improvements being seen in the form of lower closing costs. Despite the official surveyed average remaining at 4.0%, improvements today came at their best pace since the initial big move up on 3/13 and 3/14. Several lenders are approaching viability at 3.875%, though they too, are more advantageously priced at 4.0%
This raises an interesting point. Recently, we’ve discussed the fact that 4.0% has been “the best combination of interest rate and closing costs for the best-qualified scenarios” even though some lenders might “not be able to cover all the closing costs at that rate.” With today’s gains, there are a few lenders that can indeed put together quotes that would look fairly attractive at 3.875% for the best qualified scenarios, but as we continue to advocate, take a look at adjacent rates to see what the trade-offs would be in terms of up-front cost vs payment.
(read more about Best-Execution calculations).
If you decided to lock today, you’d be in good company as reports from originators indicate heavy lock volume. It’s no surprise really, given the recent ugly move higher in rates that today–being the best day for rate sheets in two weeks–is seeing a lot of folks asking to be let off the roller coaster.
We can’t argue with that logic considering that the current market dynamics underlying mortgages suggest a broader range of 3.875%-4.25%. This range has persisted since August, and as we said yesterday, we tend to feel more defensive when rate offerings are nearer the lower end of any range of rates, especially one that has lasted this long. In other words, yes, this improvement is great! But make your lock/float decisions based on this one moment in time as opposed to assuming additional improvements tomorrow. We hope we see them, but things can still go either way.
Today’s BEST-EXECUTION Rates
- 30YR FIXED – 4.0%
- FHA/VA -3.75%
- 15 YEAR FIXED – 3.25%-3.375%
- 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
- We’re currently further away from the very best levels than we have been in recent months
- We’ve broken away from a long, stable trend and are expecting greater volatility
- Rates could easily move higher or lower, but given the above facts, there seems to be more risk than reward regarding floating
- (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).