Mortgage Rates Fight To Hold All-Time Lows Ahead Of The Holiday

Mortgage Rates were roughly unchanged today, essentially fighting broader bond market weakness in order to remain in all-time low territory.  With an early close for markets today and the Independence Day holiday tomorrow, it wouldn’t have been abnormal for lenders to be a bit more conservative in terms of pricing.  Indeed some lenders were weaker today, but only slightly.  On average, things remained right where they were yesterday with 30yr Fixed Best-Execution firmly into 3.625% territory and some lenders in 3.5% territory.

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

Because of the holiday, lenders won’t be generating rate sheets again until Thursday morning.  By the time they do, markets could be decidedly different owing to a significant amount of economic data and events occurring before the time of day that most lenders put out their first rate sheet.  Granted, Friday remains the biggest deal with the extremely important Employment Situation Report standing alone as the most important piece of economic data released each month, and the only report of the day.

 But we could see a sort of “lead off” in one direction or another if Thursday morning’s data suggests it.  If Friday’s jobs data were to corroborate that move, then things could easily be very different by the time we see Friday’s first rate sheets.  Given that we’re at all time lows today, it seems like a fairly big risk to take, but we’d also note that the default expectation for rates is “low and steady” until/unless they do something to break that trend.

Long Term Guidance: We’d continue to advocate against trying to “get ahead” of current market movements due to the high degree of uncertainty.  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

Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage

Friday is the big data day with non farms payroll report. That being said, this market seems semi-immune to domestic economic data these days due to ongoing EU issues. Would take a remarkable jobs report to swing pricing substantially, less inclined to worry about it than most previous months.

Bob Van Gilder, Finance One Mortgage

Put some burgers on the BBQ and enjoy your family and friends for this 4th of July! Rates remain sizzling. How would you like yours? Lock it if it’s what you waited for…float if you have the stomach for it.

Victor Burek at Benchmark Mortgage

I feel rates are going to continue to move sideways to lower for the foreseeable future. I see no reason to lock any loan that isnt within 15 days of closing. Have a safe 4th of July.

Ira Selwin, Vice President of Secondary Marketing

Don’t let your rate blow up before the 4th of July. Lock your rate if the rate you need is available. Though it seems rates may be invincible, you don’t want to be on the wrong side of things if that’s not the case.

Matt Hodges, Loan Officer, Presidential Mortgage Group

Locking any purchases inside 45 days and refinances certainly if they are approved and appraisal is back. I don’t know that Friday’s NFP and unemployment numbers help us at all. They may hurt if they are in line or stronger than expected. Don’t get greedy. Lock it down!

 

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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Rents keep rising

As if record low mortgage rates and beaten down home prices weren’t enough to get prospective home buyers off the fence, there’s another factor that has made the case for buying even stronger: rising rents.

Mortgage Rates Begin July At New All Time Lows

Mortgage Rates improved moderately today bringing them just barely into new all-time low territory.  Some lenders released 2nd and even 3rd rate sheets today with improved pricing and the 3.625% Best-Execution level is beginning to looks more and more like it will share the stage with 3.5% if current pricing is maintained.  For now, 3.625% is still dominant, but some of the more aggressive lenders are arguably at 3.5% for Conventional 30yr Fixed Best-Execution.

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

Pricing improvements came today partly due to bond markets holding slight gains versus Friday’s latest levels.  MBS (the mortgage-backed-securities that most directly influence lenders’ rate sheets) are part of bond market and normally trade in the same direction as US Treasuries though often by varying degrees.  Today was no exception with a fairly calm and mildly positive morning (positive = slightly lower in yield or rate).  

The calm was interrupted for markets to react to a much weaker-than-expected report on the Manufacturing sector that showed the first instance of shrinking activity since July 2009.  Bond markets took all off a few short minutes to dash lower in yield, but again resumed their calm, sideways patterns after the adjustment.  The report was the most significant piece of economic data until after markets return from a day off on the 4th.

However abrupt the market movement may have been after the report, it’s important to note that it was consistent with the ongoing theme that we began to reiterate last week, which is this: 

“we’re feeling less and less like rates are cutting this narrow, converging path because they’re ready to break quickly to one direction or another and more like rates are just really low, really sideways, and will take a lot of convincing before doing something else.  In other words, we’re planning on “low and sideways” around current levels until something big happens to change that.  All we can do is watch and wait for such things and keep an eye out for upcoming candidates to motivate the potential movement.  

Unless something carries us out of this low, narrow range before then, we’re only feeling especially defensive about the Employment Situation Report on Friday morning.  If rates are at or near all-time lows on Thursday afternoon, it would be hard to advocated doing something other than locking those in.  

Long Term Guidance: We’d continue to advocate against trying to “get ahead” of current market movements due to the high degree of uncertainty.  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

Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage

Mortgage rates continue to drop, and today is no exception. I’m using the improved rates to cover even more of my clients’ closing costs and escrows. My borrowers and I always have the “lowest rate is not necessarily the best deal for you” conversation early in the loan process. If an 1/8th higher rate saves us thousands in closing costs, it’s often the prudent move, especially with rates as ridiculously low as they are.

Jeff Statz, Network Funding L.P.

There is still much to discover for news and data this week, but if your closing is around the corner, locking is a safe bet today.

Victor Burek at Benchmark Mortgage

If you floated over the weekend, you were rewarded with great rates this morning. If within 15 days of closing, go ahead and lock…everyone else should continue riding the float boat.

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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Mortgage Rates Rise But Hang On To Some Of Yesterday’s Improvement

Mortgage Rates moved slightly higher today but only erased a portion of yesterday’s improvement.  That leaves the Conventional 30yr Fixed Best-Execution rate unchanged and borrowing costs slightly higher than yesterday, but still lower than the previous day.  

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

Much like yesterday, the domestic economic data regarding Consumer Sentiment, Consumer Spending, or the Chicago manufacturing data were all non-events next to bigger considerations.  Today, or overnight rather, the market’s focus turned to news that European leaders agreed to allow recapitalization of troubled European banks out of the Euro-zones permanent bailout fund, the European Stability Mechanism, or ESM.  

The recapitalization isn’t something that will happen overnight, and indeed several countries said “we don’t need that now, but might some day!  Thanks!”  in not so many words.  Additionally, the European Central Bank (ECB) noted that none of this can begin until supervision of the program is established–something that should happen by year end.  Even so, it’s perceived as a small step in the right direction for a European Union that’s had a hard time getting on the same page fiscally.  Such things tend to encourage better risk-tolerance in markets, generally leading to higher stock prices and bond yields.

Although bond yields did, in fact, rise noticeably in terms of Treasuries, the Mortgage-Backed-Securities (MBS) that most directly influence mortgage rates, experienced a tamer version of the weakness.  This is what ultimately allowed mortgage rates to hold on to some of their gains from the previous session whereas Treasuries have given all of theirs back.  This “ground holding” is consistent with a bit of a shift in our analysis seen yesterday.

“we’re feeling less and less like rates are cutting this narrow, converging path because they’re ready to break quickly to one direction or another and more like rates are just really low, really sideways, and will take a lot of convincing before doing something else.”

In other words, we’re planning on “low and sideways” around current levels until something big happens to change that.  All we can do is watch and wait for such things and keep an eye out for upcoming candidates to motivate the potential movement.  

Long Term Guidance: We’d continue to advocate against trying to “get ahead” of current market movements due to the high degree of uncertainty.  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

Mike Owens, Partner with HorizonFinancial, Inc.

I am and will always be a lock and load fan. Floating always leaves the chance of a Titanic type event that I want no part of. Therefore lock in your 20 or 15 year loan and only consider 30 if you really need payment relief.

Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage

Stock market rallies such as today’s ordinarily lead to higher mortgage rates as money flows out of bonds and into stocks. The fact that rates are essentially unchanged today is a bullish signal for bond markets, showing strength and probability of continued low rates. Said it before, will say it again, US economy is best of a bad lot, and until our fiscal time bond blows up will continue to be!

Jeff Stats, Network Funding L.P.

I am guiding my customers to lock if closing in the next 30 days. The stored energy poised to affect MBS negatively is simply too great a risk to justify the reward.

Victor Burek at Benchmark Mortgage

The EU summit has come and gone with no real solution, just more can kicking. With the surge in equities, lenders rate sheets were slightly worse this morning. That said, i favor floating all loans over the weekend, then i will continue with my strategy of advising clients to float til within 15 days of closing.

Kent Mikkola #353976, Mortgage Consultant ,  M & M Mortgage, LLC #213677

Still more to lose than gain by floating, in my opinion.

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).

…(read more)

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Real Estate News: Kinko’s Founder Lists Montana Estate for $25 Million

Here is a look at real-estate news in Friday’s WSJ.