Mortgage Interest Rates managed to make modest gains today, moving just slightly lower for the average lender. That’s a welcome development after 10 straight days of higher rates, but it’s more of a symbolic victory for now. Reason being: many lenders are quoting the exact same rates as yesterday, with improvements limited to small adjustments in upfront costs. In plain English, interest rates are lower on average, but by such a small amount that the average borrower won’t notice a change. 3.625% continues as the most common quote on top tier scenarios, up from 3.375% just Two weeks ago.
Interest rates Cheaper Today, Yet Greater than a Week Ago
Take into account, if you find any other article on mortgage interest rates today (particularly if the source is a major media outlet or a financial news site), that Freddie Mac’s weekly rate report became available today. It conveyed a surprisingly tiny amount of the actual rise in rates that’s occurred during the last 2 weeks. As always, remember that that Freddie’s data is survey-based and that it relates to survey responses received on Monday-Wednesday of any given week.
Per Freddie Mac: “survey reminder emails are sent out on Mondays and lenders are asked to respond by close of business Wednesday.” That means that this week’s responses could have been distorted by the Columbus Day market closure on Monday (lenders who responded would only have Friday’s rates to reference), and that much of the impact from Tuesday’s bigger jump in rates went undetected.
Loan Originator Perspective
So far the optimism from yesterday is continuing today with bonds rallying. With all the recent weakness we’ve had, lenders can be very slow to pass on the gains. So, you may want to continue to float overnight and check pricing tomorrow morning. -Victor Burek, Churchill Mortgage
After multiple days of interest rates setting higher highs and higher lows (really a gradual process throughout the last 2 months), bond markets got a little bit of relief today. Typically we’d break out the pom-poms and celebrate, but the issue is that today may just be a breather and some profit taking. If this is the case, get ready because we’re moving higher. If it’s not a consolidation, it is currently unknown how strong the legs may be of this rally. Locking in makes the most sense for loans with a 30 day window, 45 day closings should strongly consider locking here as well. If we see a reversal, great, but in line with the overall current momentum I’m not a believer. -Gus Floropoulos, VP, The Federal Savings Bank
Bonds rebounded slightly today, posting only their 2nd day of gains since September 29th as auction demand for 10 year treasuries exceeded expectations. I’m not ready to call one positive day an end to rates’ upward trend, let’s see about 3 days before we get too excited. While it may be less imperative to lock ASAP, it’s certainly far too early to expect further pricing improvements. Float with caution, if at all. -Ted Rood, Senior Originator
The 10 Yr Treasury’s welcome bounce off the top of the recent range yesterday has me recommending floating at this point. In most cases, with a well-established range, float when bouncing off the top and lock when bouncing off the bottom. -Timothy Baron Licensed Loan Originator, NMLS #184671
Today’s Best-Execution Rates
30YR FIXED – 3.5-3.625%
FHA/VA – 3.25%
15 YEAR FIXED – 2.75-2.875%
5 YEAR ARMS – 2.75 – 3.25% dependant upon the lender
Ongoing Lock/Float Considerations
In the most significant of pictures, “global growth concerns” remain the driving force behind the long-term trend toward lower rates
Amid that trend, periodic corrections toward higher rates can and will happen. These can happen for no apparent reason, or they could be caused by adjustments to expectations surrounding central bank policy at home and abroad, as well as geopolitical and systemic risks
Time horizon and risk tolerance are 2 variables to consider when it comes to locking. If you have sufficient time and don’t mind losing some ground, set a establish limit with regards to exactly how much higher rates might go before you’d lock to prevent further losses, and then float in the hopes of never seeing that limit.
In the shorter-term, it certainly is best to look for lock opportunities after rates have been moving lower or sideways repeatedly, especially if they’ve since begun to move back up in any type of consistent way.
As always, please keep in mind that the rates discussed generally make reference to what we’ve termed ‘best-execution’ (that is, probably 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 has a tendency 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 these two due to Freddie’s once-a-week polling method).
We work with several lenders here in the Tampa Bay and Surrounding areas that are ready to assist you with your home purchase. If you are ready to get started. Simply call us at 813-300-7116 or you can click here and we will be in touch.