Mortgages Rates took a beating yesterday, with the recently prevalent 3.875% Best-Execution rate for 30-Year Fixed, Conventional Loans falling completely off the table, leaving 4.0% in control. In some cases, lenders were better priced at 4.125%! These were the biggest single day jumps we’ve seen in rates in months, but thankfully, they went no higher today.
(read more about Best-Execution calculations).
(read more about Yesterday’s Big Changes in Rates).
When markets make large, abrupt movements like this and then move sideways as they have today, it can either be the first indication of a correction back toward previous levels or merely a pause to consolidate before heading in the same, ugly direction. Shocking right? Rates will either go up or down… Groundbreaking analysis!
This might seem like a simple statement of the obvious, but here’s why I’m bringing it up: I’ve noticed over the years a tendency, both among consumers and mortgage professionals watching the market, for a certain default level of HOPE to kick in on days like today… In essence, we’ve gotten beat up pretty good over the past few days and it’s only natural that a lull in the beating would give us some hope that it’s over…
While it’s perfectly fine to HOPE for such things, don’t let it affect your decision making process (assuming you’re faced with a decision regarding locking or floating). Understand that rates could just as easily move higher tomorrow as they could hold steady or improve.
Even in terms of assessing the market movements on a technical level, we would need to see how tomorrow turns out before we could begin to entertain a higher-than-random chance that mortgage rates will dig in for support at current levels and possibly rally lower. Today was promising, but not conclusively so, and more likely than not, is merely the beginning of a period of greater volatility for rates. Some of that volatility might work in our favor, but for now, we expect the swings to be bigger and the windows of opportunity to be smaller.
Today’s BEST-EXECUTION Rates
- 30YR FIXED – 4.0% at best. Some 4.125%
- FHA/VA -3.75%
- 15 YEAR FIXED – 3.25% and 3.375%
- 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
- Current levels have experienced increasing resistance in improving much from here
- There are technical reasons for that as well as fundamental reasons
- Lenders tend to get busier when rates are in this “high 3’s” level and can throttle their inbound volume by raising rates or costs.
- While we don’t necessarily think rates are destined to go higher, given the above facts, there seems to be more risk than reward regarding floating
- But that will always be the case when rates operating near historic lows
- (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).