Mortgages Rates broke a sideways streak to move lower yesterday, but are right back to their ‘sideways ways’ today! This keeps the Conventional 30yr Fixed Best-Execution Rate at 4.0%, although 3.875% quotes are viable, even if they don’t necessarily constitute the most efficient combination of closing costs and payment for most scenarios.
This raises an interesting point regarding “efficiency.” What is the “most efficient combination” of closing costs and payment? Ultimately that will depend on several factors that can vary between scenarios and even between lenders. There’s always a COST associated with moving to a lower interest rate, and although rates move in linear 0.125% increments among most lenders, the COSTS to move between those rates can vary greatly.
Right now, it’s relatively cheap to go from 4.25% to 4.125% or from 4.125% to 4.0%, but costs increase sharply for the next eighth of a point lower. That’s why we note 4.0% as the most efficient combination, even if 3.875% is doable. Above all though, we’d continue to advocate that you assess multiple options to see which fit best for your own sense of efficiency.
(read more about Best-Execution calculations).
Despite recent improvements and today’s sideways move, the current market dynamics underlying mortgages suggest a broader range of 3.875%-4.25%. This range has persisted since August, and 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, we’re in favor of assessing your options based on this one moment in time to avoid the risk of being lulled into a false sense of security by recent improvements and stability. We’re not totally convinced the sense of security would indeed be “false,” but the pace of economic events does increase noticeably into the end of the week, providing more opportunities for volatile market movements to have an effect on mortgage rates.
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).