Mortgage Rates moved higher again today, capping a 3 day run into significantly weaker territory. While noticeably higher over that time, Friday’s rates were all-time lows, meaning today’s Best-Execution rates for 30yr Fixed Conventional loans has yet to rise back to it’s previously stable level at 3.875%. For now, lenders remain closer to 3.75% for ideal scenarios, up from Friday’s 3.625%.
(Read More:What is A Best-Execution Mortgage Rate?)
Today’s market movements were slightly more aggressive than previous sessions this week and volumes were generally high as traders make last minute adjustments before Bernanke’s Congressional Testimony tomorrow. Although this is not an FOMC policy communication, tomorrow’s speech is increasingly viewed as the market’s first good opportunity for a “sneak peek.”
The Fed’s monetary policy is very big deal not only for markets in general, but specifically for mortgages. If markets get the impression that the Fed will renew/maintain their policy of reinvesting proceeds from their MBS portfolio back into new MBS purchases, it should be a net positive for rates. However, Fed stimulus also benefits stock markets and the general acceptance of “risk.” That can have a negative effect on broader bond markets even if MBS (the “mortgage-backed-securities” that most directly influence mortgage rates) are performing better by comparison.
This was the case today as the secondary mortgage market was “less bad” than US Treasuries in terms of rising rates. Underlying Treasuries are immensely important to the mortgage market as they’re the best benchmark to assess big, broad shifts in the overall interest rate environment. The month of June, with the last FOMC Announcement before Operation Twist expires, and Greek elections, is definitely one of those potential “big, broad, shift” moments in history. It’s no surprise then, that 10yr Treasury yields, after having broken well below the previous all time lows at 1.67 returned precisely there today to wait for Bernanke tomorrow at 10am.
We can look at the fact that yields went no higher than this as a positive indication that rates have topped out or simply the market’s way of seeking some sort of equilibrium ahead of a key event. Rates could move in either direction tomorrow and still have completely reversed course by next week. It’s a risky, volatile time, and Best-Ex is still below it’s recent long-standing 3.875% line in the sand.
Long Term Guidance: We’d continue to advocate not trying to “get ahead” of current market movements as a high degree of uncertainty is pervasive. While it’s a reasonably safe assumption that European concerns will generally help rates stay lower than they otherwise would be, that “otherwise would be” part is very much a moving target. Best bet is to focus on the fact that rates are at their all time lows, and can change quickly based on events that aren’t “scheduled” or able to be forecast. Risk vs reward for floating vs locking looks a bit larger than we’d like, but not out of the question for those who understand the risks and have an exit strategy if things don’t go their way.
Loan Originator Perspective With Rates At All Time Lows
Alan Craft, Loan officer at Integrity Home Loan of Central Florida
I hate to sound like a broken record, but my stance has been the same for weeks. We are at all time lows and the likelihood of rate increases is far greater than for decreases. Therefore, we are still advising all clients closing within 60 days to lock.
Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage
Rates up from Friday on stock market recovery and hopes of European progress. That being said, we’re within a hair of best pricing in history. Locked two loans today before prices worsened. Can’t reinforce enough that anyone at 5.0% or above should look at refi options now, don’t continue to waste money daily!
Victor Burek, Mortgage Planner, Benchmark Mortgage
Rate sheets have taken a beating the last few days, but I feel a bottom is in at this level. As always lenders take much more than MBS price warrants. If you have some time before closing i think floating will pay off. Europe is still the driver and they are far from any kind of resolution to their problems.
Bob Van Gilder, Originator / LO, Finance One Mortgage
Off of records lows at this point. If you didn’t lock 3.625% or 3.750%, a 3.875% rate ain’t too shabby either! (talking conforming conventional loan) —- A mortgage below 4%— who’d thunk it?
Matt Hodges, Loan Officer, Presidential Mortgage Group
If you are closing in June, you should be locked and done. Don’t look back – rates are great. If you are floating and within 30 days of close, I’d suggest locking. If you are between 30 and 60 days until closing and can stomach a sea of churning rates, discuss float/lock decision with your loan officer. If you are floating, have a concrete plan to lock with your loan officer, if he or she can’t reach you and the market is volatile.
Kent Mikkola #353976, Mortgage Consultant, M M Mortgage, LLC #213677
Rates are still incredibly low. Float at your own risk.
Today’s BEST-EXECUTION Rates
- 30YR FIXED – 3.75%
- FHA/VA -3.75%
- 15 YEAR FIXED – 3.125 edging down to 3.00%
- 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
- Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally more risk than reward regarding floating
- But that will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn’t always mean they’re done improving.
- (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).