We experienced some wild price swings today but consumer borrowing costs improved in the end. In many cases those improvements were significant.
CURRENT MARKET*: The BestExecution 30-year fixed mortgage rate is between 4.00 and 4.250%. More lenders are willing to offer 4.00% and 4.125% is widely available. On FHA/VA 30 year fixed BestExecution
is 4.00%. Some lenders are willing to quote 3.875% 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 still
best priced at 3.25. ARMs seem to have bottomed out.
While many lenders did greatly improve their consumer rate quotes today, 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: MBS prices are setting new all-time high’s on a daily basis and mortgage rates are still moving lower. 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