Mortgage Rates: Prolonged Availability of All-Time Lows

Although BestExecution  Mortgage Rates didn't improve today, there were generally some very slight improvements in the costs involved in obtaining those rates.  This prolongs an already impressively long stint near all-time mortgage rate lows.

It also prolongs the phenomenon for rate-watchers where there's opportunity for rates to move down an eighth of a point or so offset by the risk that economic data or news headlines will cause market volatility sufficient to send rates higher. 

CURRENT MARKET*: The BestExecution 30-year fixed mortgage rate is now solidly at 4.125%. Several lenders are willing to offer lower rates, but in most cases, those quotes carry additional closing costs.  On FHA/VA 30 year fixed BestExecution  is straddling  3.875% and 3.75%.  Deals can be structured with lower rates, but again, you'll pay more for those, so make sure you assess the time it takes to break-even on the extra expense.  15 year fixed conventional loans are best priced at 3.375%. Five year ARMs are best priced at 3.125%.

A note on the greater-than-normal variation in rate offerings between lenders.  There is an increased amount of variety in what individual lenders are now quoting as their BestExecution rates.  This is a factor of price volatility in the secondary mortgage market. Unfortunately when volatility picks up in the secondary mortgage market, the cost of doing business gets more expensive for lenders (hedging costs go up). Those added costs are usually passed down to consumers via extra margin in rate sheets.  Additionally, the recent rates rally makes lenders busy enough that some control their inbound volume by raising rates regardless of the secondary mortgage market in order to discourage new applications/locks.

GUIDANCE (unchanged): BestExecution rates haven't changed, but we're close to a changing of the guard from 4.125 down to 4.0.  If you're aggressively pursuing that extra eighth of a percent of improvement in rate, and don't mind paying extra closing costs if the market moves against you, this is one of those rare occasions were we're close enough to moving lower in BestExecution and far enough away from moving higher than a short term float could work.  We'd caution that much of the current strength in bond markets is due to uncertainty in Europe and the headlines that can change that outlook DO NOT adhere to a schedule.  In other words, things can change rapidly.  As a general rule, when 4.125% and 4.0% are the two best candidates for a BestExecution rate, we favor locking due to the nearness to all-time lows.

Refi Roadmap: A Locked Rate Isn't a Closed Loan <-- must read