Consumer borrowing costs ticked higher today in another volatile trading session (multiple reprices experienced). Mortgage rates are still in record setting territory though. This is apparent in the chart of Consumer Rate Quotes below…
If the note rate line
moving up, the
closing costs associated with it are on the rise. If the note rate line
is moving down, the closing costs associated with it are on
the decline. Consumer borrowing costs fell to new record lows yesterday before moving marginally higher today.
The chart above compares the average origination costs (as a
percentage of loan amount) for several available mortgage note rates as
quoted by the five major lenders. Each line represents a different 30
year fixed mortgage note rate. The numbers on the right vertical axis
are the origination closing costs, as a percentage of your loan amount,
that a borrower would be required to pay in order to close on that note
rate. If the note rate graph line is below the 0.00% marker, the
consumer may potentially receive closing cost help from their lender in
the form of a lender credits. If the note rate line is above the 0.00%
marker, the consumer should expect to pay additional points at the
closing table to cover permanent buydown costs and origination fees.
PLEASE SEE OUR MORTGAGE RATE DISCLAIMER BELOW
CURRENT MARKET*: The BestExecution 30-year fixed
mortgage rate is between 4.000% and 4.250%. Several lenders are willing to
offer 4.000%, 4.250% is widely available, and we’ve actually seen strong 3.875% quotes too. On FHA/VA 30 year fixed BestExecution
is 4.00%. Some lenders are willing to go as low as 3.75% without extra closing
costs. 15 year fixed conventional loans are best priced at 3.625% but
we’re seeing aggressive quotes as low as 3.375%. Five year ARMs are
best priced at 3.25. ARMs seem to have bottomed out.
While many lenders have greatly improved their consumer rate quotes over the past few days, we must point out an
increased amount of variation in what individual lenders are quoting as their
BestExecution rates. This is a factor of price volatility in the secondary
mortgage market. Unfortunately when volatility picks up in the
secondary mortgage market, the cost of doing business gets more
lenders (hedging costs go up). Those added costs are usually passed down
consumers via extra margin in rate sheets. These costs are unavoidable.
The best thing for mortgage rates right now is stability.
GUIDANCE: If you missed the
boat on record low mortgage rates last November/October, the
opportunity is once again out there for the taking. We think you should
jump on it as soon as possible. The risks involved in floating have
greatly expanded to include lenders taking it upon themselves to
negatively adjust rate sheets (to slow loan production).
CAUTION: MND guidance is speculative in nature. We don’t have a
crystal ball, we can’t predict the future, we can only share our outlook.
Making the following considerations extra important……………………
What MUST be considered BEFORE one thinks about capitalizing on a rates rally?
1. WHAT DO YOU NEED? Rates might not rally as much as you
2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you
3. HOW DO YOU HANDLE STRESS? Are you ready to make tough
*BestExecution is the
most cost 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 buy down costs.
*Important Mortgage Rate Disclaimer: The BestExecution 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 30year fixed conventional/FHA/VA mortgage rates still include closing
costs such as: third party fees + title charges + transfer and recording. Don’t
forget the fiscal frisking that comes along with the underwriting process