Although the recently confirmed 3.875% Best-Execution level remains intact for 30yr fixed, conventional loans, Mortgages Rates moved slightly higher today in terms of the costs required to obtain those rates. Weakness in Treasuries today was more pronounced than MBS, the “mortgage-backed-securities most directly responsible for determining mortgage rates. (learn more about how we calculate Best-Execution in THIS
Initially driving today’s market movements was news that political leaders would meet in Greece to vote on a soon-to-be-drafted bailout package. Greek officials have been reluctant to stand up in favor of creditor-imposed austerity. Even though they likely realize the dire implications of such reluctance, the political backlash from Greece’s populace is pretty dire in it’s own right. But that realization has been slow to work its way through markets, which seem to be willing to wait in upbeat anticipation for new developments in Greece that never seem to happen–at least not on time.
It was the same again today. Markets were initially upbeat on the promise of ongoing negotiations being concluded. When we say “markets” in this context, it’s more to do with equities/stocks, whereas mortgage rates are part of bond markets. When markets are upbeat in this way, it decreases the demand for less risky investments such as Treasuries and MBS. When demand decreases for MBS, prices fall, and that means that lenders will earn less by selling pools of loans on the secondary market, and must raise rates to keep pace with their various cash-flow considerations.
Even after news came out that the meeting in Greece would not take place until tomorrow, stocks only faltered momentarily, deciding that the nature of the news (no material objections to the proposal on the table, simply a delay in getting it drafted) wasn’t enough to reverse the current course. Bond markets, however, were able to put an end to a somewhat ugly slide weaker. The damage had already been done as far as mortgage rates would be concerned, but the silver lining is that it only amounted to minimal increases in borrowing costs while most scenarios will still be best-executed at the same rates today as yesterday’s.
With the NEW potential resolution on Greek negotiations tomorrow as well as an important 10yr Treasury Auction, there are some sizable risks ahead for mortgage rates, which heretofore have done a good job of holding onto 3.875% Best-Execution through some rough waters. As always, markets and rates can move in either direction, but we would point out that those movements could be bigger-than-average tomorrow.
Today’s BEST-EXECUTION Rates
- 30YR FIXED – 3.875% mostly, less 3.75 today, 4.0’s
- FHA/VA -3.75%
- 15 YEAR FIXED – 3.25%
- 5 YEAR ARMS – 2.625-3.25% depending on the
Ongoing Lock/Float Considerations
- Rates and costs continue to operate near all time best
- Current levels have experienced increasing resistance in improving much from
- There are technical reasons for that as well as fundamental reasons
- Lenders tend to get busier when rates are in this “high 3’s” level and can
throttle their inbound volume by raising rates or costs.
- While we don’t necessarily think rates are destined to go higher, given the
above facts, there seems to be more risk than reward regarding floating
- But that will always be the case when rates operating near historic
- (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).