rates moved higher today for the first time in nearly two weeks. Although the changes in lenders’ rate sheets versus yesterday were largely a factor of late-day market gyrations that followed the afternoon’s FOMC Announcement and Press Conference, the weakness in bond markets wasn’t directly linked to any of the FOMC Headlines or any particular question/answer from Bernanke’s press conference. In the grand scheme of things, the movement was small, but just enough relative to the day’s flat range to justify revised rate sheets from lenders. Best Execution continues to hover between 3.625% and 3.75%.
Far more important than any of the afternoon volatility is the distinct lack of volatility that followed what would normally be the actionable events on an FOMC day. The fact that the market movement arrived well after the conclusion of said events, in conjunction with the way that the trading evolved (very measured and linear) suggests any variations we saw during US trading to be incidental byproducts of the trading itself (as opposed to convicted responses to news and events). This is not common for FOMC Days! It means that markets are even more susceptible to headlines out of Europe in the coming days, and to a lesser extent, a large calendar of economic data tomorrow.
Loan Originator Perspectives
“We locked all newly ratified purchase clients and refi clients who are ready (meaning they’ve provided all their income and asset documentation required for pre-approval) yesterday before the close. It was a tough decision since Fed meetings can go either way these days. But it turned out to be the right decision. ” –Julian Hebron, Branch Manager, RPM Mortgage.
“It appears to be the case that Europe is the driver for rates. Bad news helps rates and good news hurts rates. Therefore, hope for European turmoil if you want rates to drop. Anything other than that and rates will continue the climb. However, a stock market correction will help slow this down. This correction has to be coming and it will help. I’m locking everything going into to process. ” –Mike Owens, Partner, Horizon Financial, Inc.
Today’s Best-Execution Rates
- 30YR FIXED – 3.75%, 3.625% coming back into view
- FHA/VA – 3.375-3.5% (varies more between lenders than conventional 30yr
- 15 YEAR FIXED – 3.00%, 2.875% coming back into view.
- 5 YEAR ARMS – 2.625-3.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates have risen moderately but consistently since hitting their all-time lows in September and October 2012.
- Regardless of global or domestic economic weakness, the subsiding fear of a disorderly EU breakup will continue to prevent rates from getting back to those lows.
- This is very likely to be the case unless a similarly panic-inducing event were to come into focus, or if a disorderly break-up regained the spotlight.
- Sequestration, negative growth, and generally choppy political and economic environments around the world DO NOT constitute that sort of panic.
- This is a “rising rate environment” until further notice, though pockets of recovery and consolidation can provide smaller-scale opportunities against the larger-scale backdrop.
- (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).