rates fell back in line with Wednesday’s levels in most cases today, though lenders’ offerings varied more than usual. Markets continue to surprise, but this time positively! We saw a good amount of improvement in underlying markets overnight and added to those gains after the morning’s economic reports. This is a bit of a break from the norm as economic data hasn’t done much to move rates recently. Furthermore, the movement was in the opposite direction as that suggested by the stronger-than-expected GDP data and generally “as-expected” Consumer Sentiment data.
Typically, when economic data suggests that growth is better than expected, interest rates and stock prices tend to move higher together, all other things being equal. Stock prices did, in fact, rise this morning, but interest rates didn’t follow. This sort of unexpected behavior can draw on several other sources of explanation, but none of them are so obvious or so strong that you should let it affect your lock/float strategy.
To that end, the environment remains relatively more risky and more volatile than it has been. We’re fairly pleased to see the levels at which bond markets put their foot down after yesterday’s weakness, and we hope the recent 3.5% ceiling in Best-Execution continues to hold (Read
More:What is A Best-Execution Mortgage Rate?), but one day’s bounce is too soon to abandon the recently more defensive stance we’ve favored. The big event on the horizon now becomes Friday’s jobs report.
Loan Originator Perspectives
“Although MBS and Treasuries are showing decent gains today, Lenders are
still reluctant to “juice” their rate sheets. Probably due to a couple
of things: 1) It’s Friday 2)Volume–Lenders are slammed not that these
are the only reasons, just a couple that come to mind. So the ol’
should I lock or float question. Yes you should lock or float depending
on your tolerance for pain. Low tolerance-lock, mid to high
tolerance-float. ” -Bob Van Gilder, Finance One Mortgage.
“Though rates are better, I still think locking is the way to go.
Floating has not paid off recently and I believe in knowing what you’re
getting. Locking secures the deal and eliminates the risk and worry. ” –Mike Owens, Partner with Horizon Financial, Inc.
Today’s Best-Execution Rates
- 30YR FIXED – 3.5%, inching back down to 3.375%
- FHA/VA – 3.25% (varies more between lenders than conventional 30yr
- 15 YEAR FIXED – 2.875%
- 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
- Rates could easily move higher or lower, but given the nearness to
all time lows, there’s generally more risk than reward regarding
- This 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
- (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).