Mortgage Rates Steady While Borrowing Costs Rise Slightly

Mortgage Rates
continue to ebb and flow in the same pattern that has persisted for over a month.  The average Best-Execution interest rate for a 30yr fixed loan has remained at 3.875% during that time and the closing costs associated withtthat rate have been gently rising and falling, with increasing regularity.  We’ve rarely strung together 3 days in a row with movements in the same direction (i.e. borrowing costs rise very slightly 3 days in a row, while Best-Ex stays at 3.875%), and the actual difference in those costs day over day continues to be fairly minimal.

Those borrowing costs rose very slightly today, a reasonable conclusion to the previous two sessions offering all time low rate/fee combinations.  This means that whereas 3.75% was “as close as it’s ever been to sharing equal recognition with 3.875% as a viable choice for Best-Execution,” that’s no longer the case today, but it should be noted that the buydown schedule (amount of additional closing costs required to move down in rate) at some lenders allows for scenarios with even lower rates to make sense depending on your preferences and qualifications.

If you didn’t catch Friday’s Article, which
went into a bit more detail on how we determine “Best-Execution,” it’s
worth a read.  But the bottom line is really this: regardless of the
actual interest rate levels, there’s no other way to say the following: rates are as low as they’ve ever been.  How long will
this continue?  There’s no way to know for sure, but we generally
advocate a conservative approach with rates at all time lows. 
“Conservative” in this sense simply means that history has shown us how
quickly record-low rates can disappear.  While we certainly wouldn’t
rule out the possibility that rates can improve, we’ve already been
experiencing the fact that further gains are hard-fought and take more
time than gains seen in the middle of the range. 

Whatever your disposition toward locking vs floating, it makes sense
to set yourself a “stop,” of sorts, by deciding on a rate slightly
higher than what you’re currently being quoted, at which you’d lock at a
loss if the market moves against you.  Locking in such a scenario can
prove exceedingly frustrating more often than not as the higher
probability eventuality has been for rates to return lower, but this
pales in comparison to the potential frustration of rates NOT returning
lower.

Today’s BEST-EXECUTION Rates

  • 30YR FIXED –  3.875%, 3.75% as close as it’s been
  • FHA/VA -3.75%
  • 15 YEAR FIXED –  3.375% / 3.25%
  • 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
    operate near all-time levels, and as 2011 showed us, it doesn’t always
    mean they’re done improving.

…(read more)

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Refinance Applications Surge 26.4% as Rates Set New Lows

Mortgage applications jumped 23.1
percent on a seasonally adjusted basis during the week ended January 13,
2012.  The increase in the Market
Composite Index, a measure of loan application volume maintained by the
Mortgage Bankers Association (MBA) reflected improvements in both the purchase
and refinance business following the traditionally slow Christmas and New Year
holiday period.  On an unadjusted basis
the index increased 38.1 percent.

The Refinance Index increased 26.4
percent
from the week ended January 6 to its highest point since August 8,
2011.  The seasonally adjusted Purchase
Index rose 10.3 percent, returning to pre-holiday levels.  The unadjusted Purchase Index was up 28.4
percent from the previous week and was 2.2 percent higher than during the same
week in 2011.

The four-week moving average for each
index also increased; the Composite Index increased by 5.99 percent, the
seasonally adjusted Purchase Index by 1.96 percent and the Refinance Index by
7.0 percent.

Refinancing took an 82.2 percent share
of all application activity, up from 80.8 percent the previous week and the
highest share since October 22, 2010.  Applications
for adjustable rate mortgages (ARMs) constituted represented a 5.6 percent
share of applications, up two basis points from the previous week.

Purchase Index vs 30 Yr Fixed

Click Here to View the Purchase Applications Chart

Refinance Index vs 30 Yr Fixed

Click Here to View the Refinance Applications Chart

 “Interest
rates
dropped last week due to continuing anxieties regarding the fragile
economic situation in Europe,” said Michael Fratantoni, MBA’s Vice
President of Research and Economics.  “With mortgage rates reaching
new lows, refinance volume jumped and MBA’s refinance index reached its highest
level in the last six months.  Purchase activity also increased as buyers
returned to the market after the holiday season.”

With
the exception of jumbo loans (with balances over $417,500) interest rates continued
their downward trend. Three of the rates, in fact, hit the lowest level in the
history of the MBA applications survey.  The
jumbo rate – for 30-year fixed-rate (FRM) loans – increased to 4.40 percent
from 4.34 percent with points decreasing to 0.37 from 0.47 point.  The effective rate also increased.

Thirty-year
FRM with conforming (under $417,500) balances hit a new low, decreasing to 4.06
percent with 0.48 point from 4.11 percent with 0.41 point. The effective rate
also decreased.

Rates
for FHA guaranteed 30-year FRM were
at 3.91 percent with 0.59 point, the lowest FHA
rate in the history of MBA’s application survey, down from 3.96 percent with 0.72 point.  The effective rate also decreased from the previous week.

The
third all-time low is the 3.33 percent rate with 0.39 point for the 15-year FRM. 
This was a drop from 3.40 percent with 0.37 point rate the previous week.  The effective rate also decreased.

The
average contract interest rate for 5/1
ARMs was unchanged at the record low 2.90 percent established the previous
week.  Points decreased to 0.45 from 0.49.   The
effective rate also decreased from last week.

All
rates quoted are for 80 percent loan-to-value originations and points include
the application fee.

 MBA’s covers
over 75 percent of all U.S. retail residential mortgage applications, and has
been conducted weekly since 1990.  Respondents include mortgage bankers,
commercial banks and thrifts.  Base period and value for all indexes is
March 16, 1990=100.

…(read more)

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Mortgage Rates Begin Week Holding Steady at Record Lows

After setting new records on Friday, Mortgage Rates
are absolutely flat to start the week.  That means that Best-Execution
remains most appropriately at 3.875% although 3.75% continues to be as close as it’s
ever been to getting equal recognition.  Depending on the scenario in
question, lower rates are available and in rare cases, could make
sense. 

If you didn’t catch Friday’s Article, which went into a bit more detail on how we determine “Best-Execution,” it’s worth a read.  But the bottom line is really this: regardless of the actual interest rate levels, there’s no other way to say the following: rates today and Friday are as low as they’ve ever been.  How long will this continue?  There’s no way to know for sure, but we generally advocate a conservative approach with rates at all time lows.  “Conservative” in this sense simply means that history has shown us how quickly record-low rates can disappear.  While we certainly wouldn’t rule out the possibility that rates can improve, we’ve already been experiencing the fact that further gains are hard-fought and take more time than gains seen in the middle of the range. 

Whatever your disposition toward locking vs floating, it makes sense to set yourself a “stop,” of sorts, by deciding on a rate slightly higher than what you’re currently being quoted, at which you’d lock at a loss if the market moves against you.  Locking in such a scenario can prove exceedingly frustrating more often than not as the higher probability eventuality has been for rates to return lower, but this pales in comparison to the potential frustration of rates NOT returning lower.

Today’s BEST-EXECUTION Rates

  • 30YR FIXED –  3.875%, 3.75% as close as it’s been
  • FHA/VA -3.75%
  • 15 YEAR FIXED –  3.375% / 3.25%
  • 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
    operate near all-time levels, and as 2011 showed us, it doesn’t always
    mean they’re done improving.

…(read more)

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Mortgage Rates Unchanged to Begin Slow Week

After getting pushed higher in low volume trading late last week, Mortgage Rates
are roughly unchanged today, although market volume remains exceedingly light.  This leaves Best-Execution 30yr Fixed
rates at the prevailing 3.875%, although some lenders are closer to 4.0% after last week’s weakness. 

Recently, we’ve been fairly vocal about the holiday-inspired lack of trading volume.  Whereas the theme from last week was one of low volume distorting market movements, so far this week the low volume is taking on a slightly different shape in that there’s not enough conviction to move very far in any direction.  Treasuries and Mortgage Backed Securities (MBS) traded in extremely narrow ranges today, moving very little from the levels at which they began the day.  

Please make sure to read the
“important rate disclaimer” at the bottom of the page in considering
what “all-time lows” means.  The issue of “buckets” as described in the
lock/float considerations below, remains a factor that may prevent rates
and/or fees from moving significantly lower in the short term.

Today’s BEST-EXECUTION Rates

  • 30YR FIXED –  3.875%
  • FHA/VA -3.75%
  • 15 YEAR FIXED –  3.375%
  • 5 YEAR ARMS –  2.625-3.25% depending on the lender

Lock/Float Considerations

The ongoing low volume environment through the new
year still constitutes more of a risk than a benefit as far as Mortgage
Rates are concerned.  To be clear, we’re not saying any
fundamental negativity is sweeping over the interest rate landscape,
simply situational risk.  Keep in mind that rates are about as low as
they’ve ever been and moving more than .125% lower from here will not be
easy or fast.

…(read more)

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Fixed Rate on 30-Year Mortgage Hits 3.62%

Average mortgage rates in the U.S. declined over the past week as fixed-rate mortgages reached new lows, according to mortgage-finance company Freddie Mac.