Mortgage Rates maintained their recent winning streak today, falling for the 5th straight day. The average lender is now offering the best rates in nearly 2 months. You’d have to go back early August or late July. It depends on the lender to see a better combination of rate and upfront cost.
This raises a caveat that has been important over the past few months. The outright range of rate movement has been minimal! We talk about “rates” moving every day, but that’s just convenient shorthand. It stands for “the combination of NOTE RATE and UPFRONT LENDER COSTS.” Those upfront costs are sometimes referred to as “points,” but that term isn’t universally used. Regardless of the label, this refers to whatever costs the lender is charging (or paying) at closing. These usually include origination fees, discounts, processing fees, and other amounts paid to the lender.
All that to say, most of this “movement” in rates has been in the form of the upfront costs on any individual day. If we look at the last 5 days, however, we have seen almost a full eighth of a point decrease in the rate. Floating is less risky now than it was early last week. However, keep in mind that the longer streaks like this go, the more susceptible they are to corrections.
Loan Originator Perspective
If you had the stomach to float to today, you would have been almost entirely rewarded. MBS prices are as attractive as they’ve been. I would wait cautiously for pricing updates today/tomorrow. I strongly recommend locking loans with a 45-day window. Speculating that things get better is just greedy. Pigs get fat, hogs get slaughtered. –Gus Floropoulos, VP, The Federal Savings Bank
Today’s Best-Execution Rates
- 30YR FIXED – 3.375%
- FHA/VA – 3.25%
- 15 YEAR FIXED – 2.75%
- 5 YEAR ARMS – 2.75 – 3.25% depending on the lender
Ongoing Lock/Float Considerations
- In the big picture, “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 occur for no apparent reason or be driven by changes in expectations about central bank policy at home and abroad, as well as by geopolitical and systemic risks.
- Time horizon and risk tolerance are two variables to consider when locking. If you have plenty of time and don’t mind losing some ground, set a limit as to how much higher rates could go before you’d lock to avoid further losses, and then float in the hopes of never seeing that limit.
- In the short term, it’s always good 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 consistent way.
- As always, please keep in mind that the rates discussed generally refer to what we’ve termed ‘best-execution‘ (that is, the most frequently quoted, conforming, conventional 30-year 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 tends 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 the two due to Freddie’s once-a-week polling method).
Source: http://www.mortgagenewsdaily.c