Flat Mortgage Rates: No Laughing Matter


So have you heard the one about the
markets that were highly susceptible to European headlines?  There’s no punch line.  It’s not a joke and there’s really nothing
funny about it. 

Case in point, consider the fact
that Treasury yields are significantly lower today, having fallen from around
2.07 to 1.96, but Mortgage
have barely budged!  Reason
being, the market-based panic created by concerns about the debt situation in
the EU primarily benefits Treasuries. 
MBS (the bonds that most directly affect mortgage rates) don’t have the
same safe haven appeal and tend to underperform Treasuries at times like
this.  Thus, fairly flat mortgage rates
while Treasuries rally.

Granted, we can (and often do, over
on the MBS
Commentary Blog
) go into much more detail on this, but that’s the
gist.  And on an even pithier note, the
bottom line is that Best-Execution rates are unchanged vs yesterday.  Some lenders are a touch higher or lower in terms
of closing costs, but only in rare cases would you be looking at a change in a
rate quote today.


  • 30YR FIXED –  
    Centered on 4.0%, getting close to 4.125%
  • FHA/VA 
    3.75- 3.875%
  • 15 YEAR FIXED – 
  • 5 YEAR ARMS –  low
    3% range, huge variations from lender to lender.

Ongoing Guidance (keeping this one
relatively static until rates move):
offerings from lenders over the past month have been like a temperamental
pitching machine in a batting cage-generally getting the ball across the plate,
but with no really juicy pitches.  But recently, we’ve seen some more
consistently good pitches (best-ex around 4.0% instead of 4.25%).  Sure…
you’ve seen better, but not by much (3.875% and RARELY 3.75%).  How many more will you count on before
calling it a day? 
Personally, I’d like to end my batting cage session
with a nice hit.  The more “pitches” you wait for with rates
already at a 4.0%, the greater the risk that the next pitch will be a
curveball.  To drop the metaphor, although rates this low CAN go slightly
lower, the improvements are fairly minimal compared to how much higher they
could go.  Still, if you’re not in any particular need to refinance and
are operating on a longer-term perspective, we continue to feel good about that
“wall” at a 4.25% best-execution level as a good stop-loss point for
inclined floaters.  Ask us to explain
more about that if it doesn’t make sense. 

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