rates moved gently higher today, but levels were close enough to unchanged that several lenders were either in line with yesterday’s rates or marginally better. The trading session for bond markets including Mortgage-backed-securities, came to an early close in honor of tomorrow’s Good Friday holiday. Though there were several potential market movers in play, none of them caused a scene and trading levels moved very calmly sideways all day. Best execution (what is this?) for 30yr Fixed loans remained at 3.625% with the minor weakness being seen in the form of moderately higher borrowing costs.
In general, a good amount of yesterday’s improvements and today’s ground-holding is due to fear about “stuff that might not happen” in Italy and the EU. We spent the whole session waiting for any sort of new information on Italy’s political developments and instead heard that they’re still working on it. Current rates connote an expectation that things will go poorly in Europe. If they manage to muddle through without any major negative shocks next week, let alone actually make some progress on forming a government in Italy, it could combine very negatively with Friday’s employment data, if said data happens to be strong. Those are two big “ifs,” but risks worth considering when we’re still fairly close to the best rates in 3 weeks.
Loan Originator Perspectives
My opinion is yesterday and today are great locking opportunities. We have moved to the low end of the range, and one can HOPE we break lower, but locking would be the most statistically prudent decision.” –Brent Borcherding, Loan Officer, Capital M Lending
“Yesterday I said “not a lot of logic to today’s big MBS rally” which led rates lower, and I should clarify what I meant: when macro concerns (like worry about Eurozone debt contagion) as opposed to technical factors drive MBS and rates like they did yesterday, you can’t really rely on the rally. Today’s trading underscores the point. Not a lot of conviction either way, and we’re basically flat for MBS and rates. That’s why I’ve stuck with the theme I’ve had since Friday: in the generally rising rate environment so far in 2013 (rates are up .375% since January), borrowers shouldn’t ignore the short term dips like we’ve been seeing this week.” –Julian Hebron, Branch Manager, RPM Mortgage
“With the recent improvement in rates we feel like the prudent thing to do is lock in at present. Given the volaitility in Europe, things could swing either way next week, but we like playing it safe giong into the long weekend.” –Alan Craft, Loan Officer, Acopia Home Loans.
Today’s Best-Execution Rates
- 30YR FIXED – 3.75%, 3.625% coming back into view
- FHA/VA – 3.375-3.5% (varies more between lenders than conventional 30yr
- 15 YEAR FIXED – 3.00%, 2.875% coming back into view.
- 5 YEAR ARMS – 2.625-3.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates have risen moderately but consistently since hitting their all-time lows in September and October 2012.
- Regardless of global or domestic economic weakness, the subsiding fear of a disorderly EU breakup will continue to prevent rates from getting back to those lows.
- This is very likely to be the case unless a similarly panic-inducing event were to come into focus, or if a disorderly break-up regained the spotlight.
- Sequestration, negative growth, and generally choppy political and economic environments around the world DO NOT constitute that sort of panic.
- This is a “rising rate environment” until further notice, though pockets of recovery and consolidation can provide smaller-scale opportunities against the larger-scale backdrop.
- (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).