Mortgage Rates Continue To Solidify Bounce Back To Lows

Mortgages Rates over the past two days have done much to make ground lost leading up to Yesterday’s FOMC Announcement.  After further improvements today, rates further solidified their reentry into 3.875% 30yr Fixed Best Execution levels.  (for detail on what that means, READ THIS POST
from a few days ago).  The rounded average of various lenders’ Best-Ex rates had moved up to 4.0%, and more than a few lenders are still well-priced there, but a majority are once again offering 3.875% with attractive borrowing costs. 

Yesterday’s FOMC Announcement
(Federal Open Market Committee or simply “The Fed”) which surprised some
market participants with it’s inclusion of new verbiage describing how
long the Fed anticipated that it would keep its “Fed Funds Rate” at
so-called “exceptionally low levels,” continues to be the primary driver of the bond market rally.  When the broader bond markets are rallying like this, MBS (the “mortgage backed securities” that most directly affect mortgage rates) tend to rally as well.  Most of the overnight news out of Europe as well as domestic economic reports garnered much less-than-standard levels of attention as markets continued adjusting to the new realities of the Fed’s shift in verbiage from “mid-2013,” to “late-2014.” 

We said yesterday that, while the FOMC Announcement definitely helped rates break recent trends at 4.0% Best-Ex, it would be up to the rest of the week to solidify the rebound.  Cross the first half of that task off the list…  4.0% Best-Ex is increasingly looking like an outlying exception to a broader trend at 3.875%.  (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 this low, 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).

Today’s BEST-EXECUTION Rates

  • 30YR FIXED –  3.875% mostly, with a few lenders at 4.0% still
  • FHA/VA -3.75%
  • 15 YEAR FIXED –  3.375% and more 3.25’s
  • 5 YEAR ARMS –  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates and costs continue to operate near all time best levels
  • Current levels have experienced increasing resistance in improving much from here
  • There are technical reasons for that as well as fundamental reasons
  • Lenders tend to get busier when rates are in this “high 3’s” level
    and can throttle their inbound volume by raising rates or costs.
  • While we don’t necessarily think rates are destined to go higher,
    given the above facts, there seems to be more risk than reward regarding
    floating
  • But that will always be the case when rates
    operating near historic lows

…(read more)

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