Mortgage Rates: Unchanged From Friday

Interest Rates

Yet another fairly uneventful day
has come and gone in the world of Mortgage Rates.  For the most part, things were somewhere
between “unchanged” and “slightly improved” today as despite bond markets being
slightly weaker (higher in rate). 

Chalk this up to the fact that
Friday’s bond market gains were generally NOT priced into mortgage rate sheets

and today’s levels are pretty much in line with last Thursday’s. 

CURRENT MARKET*: The BestExecution 30-year fixed mortgage rate
is now solidly at 4.125%. Several lenders are willing to offer lower
, but in most cases, those quotes carry additional closing costs.
 On FHA/VA 30 year fixed BestExecution  is straddling  3.875%
and 3.75%. 
Deals can be structured with lower rates, but again,
you’ll pay more for those, so make sure you assess the time it takes to
break-even on the extra expense.  15 year fixed conventional loans are
best priced at 3.375%. Five year ARMs are best priced at 3.125%.

A note on the greater-than-normal variation in rate offerings between
lenders.  There is an increased amount of variety in what individual
lenders are now quoting as their BestExecution rates.  This is a factor
of price volatility in the secondary mortgage market. Unfortunately when
volatility picks up in the secondary mortgage market, the cost of doing
business gets more expensive for lenders (hedging costs go up). Those added
costs are usually passed down to consumers via extra margin in rate
sheets.  Additionally, the recent rates rally makes lenders busy enough
that some control their inbound volume by raising rates regardless of the secondary
mortgage market in order to discourage new applications/locks.

GUIDANCE: BestExecution rates
haven’t changed, but we’re close to a changing of the guard from 4.125
down to 4.0.  If you’re aggressively
pursuing that extra eighth of a percent of improvement in rate, and don’t mind
paying extra closing costs if the market moves against you, this is one of
those rare occasions were we’re close enough to moving lower in BestExecution
and far enough away from moving higher than a short term could work.  We’d caution that much of the current
strength in bond markets is due to uncertainty in Europe and the headlines that
can change that outlook DO NOT adhere to a schedule.  In other words, things can change
rapidly.  As a general rule, when 4.125%
and 4.0% are the two best candidates for a BestExecution rate, we favor locking
due to the nearness to all-time lows.

Refi Roadmap: A Locked Rate Isn’t a Closed Loan
must read


*Best Execution is the most cost efficient combination of note
rate offered and points paid at closing. This note rate is determined based on
the time it takes to recover the points you paid at closing (discount) vs. the
monthly savings of permanently buying down your mortgage rate by
0.125%. When deciding on whether or not to pay points, the borrower must
have an idea of how long they intend to keep their mortgage. For more info, ask
you originator to explain the findings of their “breakeven analysis”
on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The Best Execution loan pricing
quotes shared above are generally seen as the more aggressive side of the
primary mortgage market. Loan originators will only be able to offer these
rates on conforming loan amounts to very well-qualified borrowers who have a
middle FICO score over 740 and enough equity in their home to qualify for a
refinance or a large enough savings to cover their down payment and closing costs.
If the terms of your loan trigger any risk-based loan level pricing adjustments
(LLPAs), your rate quote will be higher. If you do not fall into the
“perfect borrower” category, make sure you ask your loan originator
for an explanation of the characteristics that make your loan more
expensive.”No point” loan doesn’t mean “no cost” loan. The
best 30year fixed conventional/FHA/VA mortgage rates still include closing
costs such as: third party fees + title charges + transfer and recording. Don’t
forget the fiscal frisking that comes along with the underwriting process

CAUTION: MND guidance is speculative in nature. We don’t have a
crystal ball, we can’t predict the future, we can only share our outlook.
Making the following considerations extra important……………………

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough

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