Money came into both sides of the market today. Stocks are set to end the day with gains, as are Treasuries and MBS, the Mortgage-Backed-Securities that most directly influence lenders’ rates. Despite improvements in underlying bond markets, Mortgages Rates were almost perfectly flat today. Some lenders in our survey were slightly improved while others offered slightly higher rates today. The net affect was that the average among all lenders in our survey is the same as yesterday.
Keep in mind that although we’re talking about “rates” moving up or down, the actual interest rates quoted by lenders will likely not have changed from yesterday, depending on your scenario. The detectable differences would come in the form of the costs associated with those rates. If we say “rates improved,” it’s the same as saying “costs moved lower.”
As far as rates themselves, 4.0% clearly continues to constitute the best combination of interest rate and closing costs for the best-qualified scenarios. Depending on other factors, lenders may not be able to cover all the closing costs at that rate. But don’t assume that a “no closing cost” loan that’s an eighth or two higher in rate is better than a lower rate loan that happens to require some more up front.
As always, we’d strongly encourage you to take a look at the several options for interest rate and closing cost on your scenario. How long will it take you to break even on extra up front cost based on the monthly savings of dropping the rate? Conversely, is the absence of closing costs worth it once you consider a higher monthly payment? Knowing how long you plan on keeping the loan in question factors heavily into these decisions.
(read more about Best-Execution calculations).
Today’s BEST-EXECUTION Rates
- 30YR FIXED – 4.0%-4.125%
- FHA/VA -3.75%
- 15 YEAR FIXED – 3.375%, returning to 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
- 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).