Mortgage Rates Improve Again From All-Time Lows


After yesterday’s FOMC Announcement, Mortgage Rates moved to all time
lows.  The rally in bond markets extended
overnight and throughout today’s trading, resulting in rate offerings improving
even more. 

Please keep in mind that lenders simply cannot move mortgage rates lower at
the same pace as a rapid rally in Benchmark Treasuries. 
Although you might hear talking heads on TV
or read articles saying that mortgage rates are tied to Treasuries, THEY ARE
, and you’ll be perennially frustrated if you expect them to be.  We explained that in greater detail earlier
in the month:(Why
aren’t rates getting lower as fast as Treasuries). 

Today’s Rates:  The current market is in a state of flux at the
moment and mortgage rates moving up and down around ALL TIME LOWS.  Whereas
BestExecution 30yr Fixed rates were mostly near 3.875% yesterday with some
lenders at 4.0%, today, they’re closer to 3.75% with quite a few lenders still
at 3.875%.  FHA/VA deals are in a bit of a predicament that’s keeping them
blocked off below 3.75% (there’s no secondary market for rates any lower than
that right now!).  For similar reasons, 15 year fixed conventional loans
may be stuck at 3.25%.  The secondary market factors driving adjustable
rate loans are in a massive state of flux, but one that is mixed between
positive and negative.  5 year ARMS remain near 3.125%, but with
variations from lender to lender.  Bottom
line, adjustable rates aren’t participating in this rally to the same extent as
fixed rates

GUIDANCE: Today’s guidance is all about the risk of “pipeline control”
price changes among lenders.  Regardless
of what happens in markets, be they Treasuries or the Secondary Mortgage
Market, lenders can still only write loans to the extent allowed by their
capacity.  Lenders also must be careful
not to lower rates so quickly that borrowers who recently locked actually break
those lock commitments in order to move down to a lower rate.  Even if borrowers do this at the same lender,
it costs lenders a lot of money.  So
whether it’s to avoid that sort of cannibalization or to avoid capacity issues,
there’s an elevated risk right now of lenders RAISING rates without warning,
even if the underlying market movements would not suggest it.  If you remember “the wall” that existed for a
long time in loan pricing moving from a 4.75% BestExecution to 4.625%, the same
underlying problems will make it a slow, difficult process to move from the
high to mid 3’s, and one that might not happen at all.  If you’ve been waiting for an opportunity to
lock in the high 3’s, you now have it.


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