rates improved moderately to begin the week, bringing most lenders back to levels not seen since January 2nd or before. Following the Fiscal Cliff “mini-deal,” FOMC Minutes, and Employment Report two weeks ago, rates rose at to their highest levels since before the Fed announced it’s most recent buying program for MBS (the “mortgage-backed securities” that most directly influence rates) in mid September. The Best-Execution rate for Conventional 30yr Fixed loans is back down to 3.375% for most lenders, though some still linger at 3.5%.
While borrowers who’d been considering locking their loan in mid December, but decided to wait for the new year aren’t quite back to levels that would constitute a major victory, if we factor in the decreased cost of a shorter lock time, we’re getting closer. Those who were considering locking but held off as markets worsened on the first week of the year, have now recouped their losses. As always, the bigger questions pertain to predicting the future–as in: will rates continue to improve from here, or was this merely a period of consolidation before another move higher?
Of course, there’s no way to know for sure. If you’re inclined to hold out for additional improvements, it makes sense to set your own personal line in the sand, beyond which you’ll lock, even if the terms are worse than today’s. We should have a clearer picture as to whether we’re continuing lower or pausing/bouncing at current levels by tomorrow morning.
Loan Originator Perspectives
“Rates seemed to have come back down a bit. Talking primarily 30 year fixed conforming. It is a great day to have a lock vs float conversation with your originator!” –Bob Van Gilder, Finance One Mortgage
“We saw some nice price improvements today. I think the volatility over the past few weeks have made secondary markets a little hesitant to pass along the “Glengarry” pricing. I’m hopeful this trend continues, and favor floating with caution if your timeframe to closing is in the intermediate to longer range.” –Brett Boyke, Senior Mortgage Banker, Wintrust Mortgage.
“We got a nice pricing bump today as MBS improved from Friday’s close. I locked one after we gained $800 in lender paid costs from Friday, like to harvest those gains when I can. We’ve stopped the bleeding from first week of 2013, could continue to improve, but I wouldn’t bet the farm we’ll recapture best rates from Dec without a lot of political and/or Euro drama. ” –Ted Rood, Senior Originator, Wintrust Mortgage.
Today’s Best-Execution Rates
- 30YR FIXED – 3.375
- FHA/VA – 3.25% (varies more between lenders than conventional 30yr
- 15 YEAR FIXED – 2.875% – 2.75%
- 5 YEAR ARMS – 2.625-3.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates have risen moderately from their all-time lows, making for relatively increased reward for floating at the expense of greater risks of loss.
- Rates could easily move higher or lower, and unscheduled, unexpected events can ultimately have the most say in the direction.
- Near term risks in 2013 include the upcoming debt-ceiling debate in Washington as well as the Fed’s policy outlook regarding securities purchases.
- (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).