Mortgages Rates have been nearly identical for the past 3 sessions. That means that Conventional 30yr Fixed Best-Execution Rates begin the week at the same 4.0% level where they ended last week. Although our daily average of all the lenders in our survey rose 0.01, there were several lenders whose rate sheets marginally improved today. All in all, the changes from last week were minor.
A note from Friday’s Commentary on 4.0% Best-Execution:
As far as rates themselves, 4.0% clearly continues to constitute the best combination of interest rate and closing costs for the best-qualified scenarios. Depending on other factors, lenders may not be able to cover all the closing costs at that rate. But don’t assume that a “no closing cost” loan that’s an eighth or two higher in rate is better than a lower rate loan that happens to require some more up front.
As always, we’d strongly encourage you to take a look at the several options for interest rate and closing cost on your scenario. How long will it take you to break even on extra up front cost based on the monthly savings of dropping the rate? Conversely, is the absence of closing costs worth it once you consider a higher monthly payment? Knowing how long you plan on keeping the loan in question factors heavily into these decisions.
(read more about Best-Execution calculations).
The week ahead has more by way of economic data and events to help inform trading levels–which ultimately inform mortgage rates–than last week. Whereas there were only a few pieces of moderately important economic data last week, this week sees several reports each morning, with some significantly more important inclusions.
For instance, Thursday itself will has a more potent line-up of scheduled market data and events than the entirety of last week. This doesn’t necessarily mean that Thursday will be a big day of movement for mortgage rates, but it does speak to the week, in general, containing more “potential energy.”
Although there’s no way to know when things will start moving and in what sort of magnitudes, we do know that it has been historically unlikely to see mortgage rates do the same thing for more than 3 sessions in a row. The historical examples of this are most easily seen when rates IMPROVE for 3 days in a row, but a similar observation can be made regarding 3 day periods of flat rates, as we’ve seen today.
At a Best-Execution level of 4.0%, rates have room to move higher or lower in the current intermediate range of 3.875-4.25%. In general, we’d feel more defensive of rate offering nearer the lower end of any range of rates, especially one that has lasted as long as this one.
Today’s BEST-EXECUTION Rates
- 30YR FIXED – 4.0%-4.125%
- FHA/VA -3.75%
- 15 YEAR FIXED – 3.375%, returning to 3.25%
- 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).