Mortgage Rates remained near 4-month highs today, despite moderate improvement in underlying bond markets. The problem for most lenders was the timing of Friday’s market movements. Bond yields spiked sharply on Friday afternoon–too late for most lenders to adjust rate sheets. Any lenders who did not ‘reprice’ on Friday were left to account for the market weakness today. As such, most lenders are right in line with their highest rate offerings in more than 4 months.
In the bigger picture, rate markets are anxious. While it’s a welcome development to see rates heading in the right direction during the course of any given day, we’d need to see sustained improvements before we could consider a shift in the longer term trend toward higher rates. Even then, Thursday’s European Central Bank Announcement can change everything in a major way regardless of the performance during the intervening days. Lenders will be hesitant to offer any major improvements until then.
I was a bit nervous floating over this weekend following Friday’s late day selloff thanks to Yellen’s speech. Bonds have since recovered all losses. As is usually, lenders will be very slow to pass along any improvements. I am in full float mode and will evaluate locking in the morning. –Victor Burek, Open Mortgage
Bonds posted modest gains today, but more of an upward drift than defined rally. The trend to higher rates is intact, in my view. It will take far more significant improvements than we saw last Wednesday, Thursday, and today before anyone should start fantasizing about rates rallying. I’m still in “lock early and don’t look back” mode, betting against the trend is seldom a sound strategy. –Ted Rood, Senior Originator
Today’s Best-Execution Rates
- 30YR FIXED – 3.625%
- FHA/VA – 3.25-3.5%
- 15 YEAR FIXED – 2.875%
- 5 YEAR ARMS – 2.75 – 3.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates have generally been trending higher since hitting all-time lows in early July
- Clearly-defined uptrends provide higher-than-average motivation to lock
- Risk-takers can try to time the dips in rates that may occur during that broader uptrend, but the reward for good timing generally isn’t worth the risk in these situations.
- We’d need to see a sustained push back toward lower rates (something that lasts more than 1-3 days) before anything less than a cautious, lock-biased approach makes sense for all but the most risk-tolerant borrowers.
- As always, please keep in mind that the rates discussed generally refer to what we’ve termed ‘best-execution‘ (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also ‘bang-for-the-buck.’ Generally speaking, our best-execution rate tends to connote no origination or discount points–though this can vary–and tends to predict Freddie Mac’s weekly survey with high accuracy. It’s safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie’s once-a-week polling method).