Mortgages Rates finally caught a break today, after spending the last several days either rising abruptly or simply not improving. The gains were small, but a welcome sight after rates hit their highest levels of the year yesterday. Today’s improvements also help keep 4.0% best-execution in the frame after yesterday threatened to raise it to 4.125%.
One thing to keep in mind at the moment is that “best-execution” is a bit more subjective at current levels. We can tell you that 4.0% is advantageously priced at most lenders in terms of the relative cost or savings to move down or up in rate respectively (i.e. costs you more money up front to get a lower rate).
We prefer to track best-ex rates that allow for no lender closing costs, and in the recent past, that has been an ideal fit for 3.875% rates. But many lenders might not be able to do that at 4.0% rates, depending on your scenario. As always, we’d recommend looking at a range of available rates and examining the costs involved in moving to higher and lower rates on the spectrum vs the difference in monthly payment to determine the best fit for you. (read more about Best-Execution calculations).
We posed the question over the past few days: Are rates on a one-way trip higher? Naturally, today’s respite shows that rates are not moving exclusively higher, every single day. Yesterday, we mentioned that underlying bond markets were approaching some levels that many market participants are looking to for support. In combination with yesterday, today makes it look like we’ve seen our first potential evidence that these supportive levels might hold.
But we’d caution readers not to make any plans based on one good bounce back amid the recent chaos. While these supportive market levels could indeed continue to keep a lid on rising mortgage rates, all too often, past precedent warns that such days can merely be brief pauses running counter to broader trends. We’ll need more days of stability or improvement before we can advise anything other than a highly defensive strategy.
Today’s BEST-EXECUTION Rates
- 30YR FIXED – 4.0%-4.125%
- FHA/VA -3.75%, starting to edge higher
- 15 YEAR FIXED – 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).