Mortgage Rates: Unchanged From Yesterday

Following yesterday’s abrupt move higher, home loan borrowing costs spent the day feeling
out their new range.  Best-Execution mortgage
rates and borrowing costs were unchanged today.

For a visual representation of the spike in consumer borrowing costs, take a look at THIS CHART.

CURRENT MARKET: The “Best
Execution” conventional 30-year fixed mortgage rate has risen to 5.125% after spending an extended period stuck at 4.875%.  For those looking to
permanently buy down their rate to 5.00%, this quote carries higher closing
costs but  the upfront fee to permanently buy down your rate  to
5.00% is worth it to applicants who plan to keep their new mortgage outstanding for
longer than the next 5 years.  Ask your loan officer to run a breakeven
analysis on any origination points they might require to cover permanent float
down fees. On FHA/VA 30 year fixed “Best Execution” is STILL
4.75%.  15 year fixed conventional loans are now best priced at 4.25%.
Five year ARMS are stratified and there is more variation in what will be
“Best-Execution” depending on your scenario.  We recommend
break-even-analysis for several potential rates.

One VERY IMPORTANT CAVEAT to any conversation about
“Best-Execution” mortgage rates: Pricing is much more stratified than
normal right now due to recent regulatory changes in Loan Officer Compensation policies.
Because of this, the Best-Execution mortgage rate can vary greatly from lender-to-lender. We advise requesting a break-even-analysis if you plan to pay points at closing.

PREVIOUS GUIDANCE:  Today’s move in the Best-Execution rate
could be a brief foray into unpleasant territory or merely the first day of a new
trend of higher rates.
  Though there’s no way to know for sure if
economic data or news headlines will show up any time soon to ease the pain,
the possibility that they WON’T is enough for us to suggest the following:
Until further notice, your decision to lock or float should assume that rates
will get worse before they get better, if they get better.  Believe it or
not, we are STILL able to conceive of a rates rally if the underlying bond
markets are able to hold their ground at some important nearby levels. 
We’ll let you know if they do and point you in the direction of more detailed
analysis if you want it, but for now, it’s fair to say the lock bias has ticked
up a notch in intensity.

CURRENT GUIDANCE: Yesterday’s move higher in Best-Execution mortgage rates could be
a brief foray into unpleasant territory or merely the beginning of a new trend
of higher rates. Though there’s no way to know for sure if economic data or
news headlines will show up any time soon to ease the pain, the possibility
that they WON’T is enough for us to suggest the following: Until further
notice, your decision to lock or float should assume that rates will get worse
before they get better, if they get better. Believe it or not, we are STILL
able to conceive of a rates rally if the underlying bond markets are able to
hold their ground at some important nearby levels. We’ll let you know if they
do and point you in the direction of more detailed analysis if you want it, but
for now, it’s fair to say the lock bias has ticked up a notch in intensity.

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

   1. WHAT DO YOU NEED? Rates might not recover as much as you
want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not recover as fast as you
want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready for MORE VOLATILITY in
the bond market.

“Best Execution” is the most 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 buydown 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 30 year fixed conventional/FHA/VA mortgage rates still include closing
costs such as: third party fees + title charges + transfer and recording. Don’t
forget the intense fiscal frisking that comes along with the underwriting
process.

Article source: http://www.mortgagenewsdaily.com/consumer_rates/206580.aspx

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