Mortgage rates moved slightly lower today in most cases, though some lenders rates were marginally higher today. On average, rates are once again in line with the ALL TIME LOWS seen on July 23rd of this year. As was the case last time we hit all time lows, the Best-Execution rate for 30yr Fixed Conventional loans is a bit of a moving target depending on the lender. Some continue to be best-priced at 3.5%, while others make most sense at 3.375%.
(Read More:What is A Best-Execution Mortgage Rate?)
Since we’re talking about all-time lows again, it’s a good time to point out some of the topics of our perennial caveat about “Best-Execution Mortgage Rates” linked above. Because every borrower’s scenario will differ somewhat, we track rates based on a “best-case” scenario in order to have a static baseline from which we can observe the day to day movement. It’s important to understand that the rates we discuss aren’t necessarily the same rates you’ll be quoted (they could be higher and in some cases lower), but the movement between the previous and current days should line up.
Even then, it doesn’t always line up for every lender. Different lenders can still respond differently to broader market changes and can also have unique considerations affecting their rate sheets independent of financial markets. Because of this, “most” lenders might be doing the same thing on any given day whereas your lender could be doing something different.
All that having been said, we’re fully aware that not all lenders are back in line with their July 23rd “lowest rates ever,” but averaged over numerous lenders, rates are right back in that territory. Some are slightly lower than July 23rd levels while others are slightly higher. Regardless of minutiae, this is one of the few best days ever for mortgage rates. That’s fairly impressive given that most lenders have priced in the recent “guarantee fee increase.”
Temporary Note On G-Fee Hikes: This is something that’s happened before and is something we know will continue to happen (read more HERE), but it doesn’t make the effects on rate sheets seem like any less of a shock when they arrive. Lenders have been adjusting their pricing policies more quickly in response to this most recent hike and it has generally been enough to push most scenarios up to the next .125% higher in rate. In our view, this is a MUCH bigger consideration than trying to time highly uncertain financial markets. Bottom line, if you can unequivocally confirm that you’re working with a lender who has not yet priced in the Guarantee Fee increase, and that your loan is on a timeline that risks being affected by it, we’d certainly favor locking in those scenarios (not to mention making sure your lender has everything they need to get your loan done without the need for a lock extension, because those are getting much more expensive in some cases if they cause the time frame on the file to cross into the higher Guarantee Fee territory).
Long Term Guidance: While the recently high degree of uncertainty remains very much intact,
the Fed’s decision to specifically target Mortgage-Backed-Securities in a
third round of Quantitative easing provides a supportive undertone for
mortgage rates. We’d still advocate not trying to get too far ahead
markets. In other words, we wouldn’t try to guess how low or how high
rates might go before changing course. For now, the trend is supportive
and positive for rates, but we’re watching it closely for the same sort
of paradoxical responses that occurred in 2010. Things look different
this time around, but a lot of that has to do with Europe. Rates remain
near all time lows and risks of volatility remain high. Those factors
suggest that you stay vigilant regarding the day-to-day swings in
mortgage rates. If you’re floating, set a limit as to how high rates
would have to go before you cut your losses and locked. Similarly, set a
target of how low rates would have to get before you lock.
Loan Originator Perspectives
Ted Rood, Senior Originator, Bank Star
Investors still trying to decide the next course of action after
Thursday’s Fed announcement. Not as much volatility today, which helps
LO’s quote accurate rates! The big events were last week, don’t look
for any moves down this week, if anything rates are more likely to drift
Mike Owens, Partner with HorizonFinancial, Inc.
I believe we could see something explosive over sees causing a flight to
safety. The Middle East is a time bomb. Treasuries have been beaten
up, but will recover if we see some conflict erupt. I always favor
locking, but this could help keep MBS from following the lender to
Constantine Floropoulos, Quontic Bank
Rates are at all time lows, that should be enough to lock any loans
closing in the next 14-21 days. Longer timelines have a bit more
flexibility to test the waters of the QE3 environment and experiment if
we actually see another leg down in rates (probability is low in our
opinion). Volatility should be a key to lock, look for up days (up in
MBS price down in treasury yield) to lock. Today would be an “up” day.
Today’s BEST-EXECUTION Rates
- 30YR FIXED – 3.375% – 3.5%
- FHA/VA – 3.25% – 3.5% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED – 2.75% – 2.875%%
- 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
- Rates could easily move higher or lower, but given the nearness to
all time lows, there’s generally more risk than reward regarding
- But that will always be the case when rates operate near all-time
levels, and as 2011 showed us, it doesn’t always mean they’re done
- (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).