Mortgage Rates Edge Slightly Deeper Into All Time Lows

Mortgage Rates were slightly lower again today after hitting new all-time lows on Friday.  It continues to be the case that different lenders are adjusting rate sheets in different ways in the current environment.  Because of this, an individual lender may not be priced at their all-time lows today, but the average across all the rate sheets we assess fell another 0.01 today, more firmly establishing 3.625% as the current Best-Execution rate for Conventional 30yr Fixed loans.

(Read More:What is A Best-Execution Mortgage Rate?)

The key event for the first half of the week was Sunday’s elections in Greece, which have already mostly played out.  At this point, we’re just waiting for Greece to go ahead and “form a government,” which is something they try to do after elections are held.  Failure to form a government after the last round of elections is one of the key factors that helped rates get to their current levels domestically.

We don’t know how much it might affect rates over the next 2.5 days if Greece is resoundingly successful in this endeavor, but given that officials from the prevailing party have already announced that they will ask the Eurogroup to lessen Greece’s austerity burden, we can’t imagine the formation of a unity government in Greece to take rates anywhere remotely close to “it never happened” levels from April.

Moreover, we’d be expecting the market’s focus to shift toward Wednesday’s official policy announcement from the Fed as well as FOMC member forecasts and Bernanke’s press conference.  There’s much less consensus out there vs last time as to whether or how the FOMC might go about addressing the topic of further fiscal stimulus.  Many believe the Fed will stay on hold until next meeting, while others think they might meet markets half-way and simply extend existing Operation Twist policies.

Long Term Guidance: We’d continue to advocate not trying to “get ahead” of current market movements as a high degree of uncertainty is pervasive.  While it’s a reasonably safe assumption that European concerns will generally help rates stay lower than they otherwise would be, that “otherwise would be” part is very much a moving target.  Best bet is to focus on the fact that rates are at their all time lows, and can change quickly based on events that aren’t “scheduled” or able to be forecast.  Risk vs reward for floating vs locking looks a bit larger than we’d like, but not out of the question for those who understand the risks and have an exit strategy if things don’t go their way.

Loan Originator Perspectives

Aaron Meyer, Mortgage Officer First Bank Financial Centre

Rates haven’t been much lower especially with the uncertainty of a Federal Reserve meeting this week and Greece’s election last night. Lock now and be happy because mortgage capacity is filling up quickly.

Victor Burek, Benchmark Mortgage

Most lenders rate sheets are as good as they have ever been today. With rates at record lows it is difficult to not advise locking; however, I continue to believe the lowest rates are ahead of us.

Ted Rood, Senior Mortgage Consultant,  Wintrust Mortgage

Last week, buzz was that Greek election on Sunday was the big unknown. After the fact today, rate sheets still better as focus swings to rising Spanish debt issues. Bottom line: Europe has more problems than US, and that will keep our rates low. Bigger concern than rates may be lenders fleeing risk. Wells Fargo announced last week they are not participating in the FHA streamline program for non Wells clients, other lenders soon followed.

Today’s BEST-EXECUTION Rates 

  • 30YR FIXED –  3.625%
  • FHA/VA -3.5% – 3.75%
  • 15 YEAR FIXED –  3.00%
  • 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
  • Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally more risk than reward regarding floating
  • But that will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn’t always mean they’re done improving.
  • (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).

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