Mortgage Rates Back to Pattern of Volatility

By: Matthew Graham •

Apparently, we jinxed the market yesterday by referring to recent stability...  Apologies on that, but the damage is minimal...   Mortgage Rates worsened slightly as trading in the secondary mortgage market and beyond grew increasingly volatile.  Best-Execution offerings may be the same or slightly higher than yesterday, but if the rate remains the same, closing costs will likely have increased.

Chalk the market volatility up to the situation in Europe and the impending summit this weekend (but then there's another summit as early as 10/26?)  Is anyone sure what's going on?  And if they are, do markets know how they feel about that? 

The answer is "apparently not," and the volatility is the clue.  For now, we have to expect it to continue indefinitely.  That's why you'll see a more "locky" leaning in the guidance below.

 Today's Rates: 

 See Rates from Lenders in Your Area
  • BESTEXECUTION 30YR FIXED -   4.125% almost 4.25%
  • FHA/VA - More 3.875% today, 3.75% still out there for some.
  • 15 YEAR FIXED -  Mostly 3.5%
  • 5 YEAR ARMS -  low 3% range, huge variations from lender to lender.

Ongoing Guidance While Best-Ex Is At Or Below 4.25%: 

 New Guidance: .  Markets are poised to move in either direction.  While we're encouraged by rates' recent ability to draw a line in the sand at 4.25%, we can't rule out upside risks from European headlines or domestic economic surprises.  Back to ping pong mode...  At least this should be familiar, considering the numerous recent moves toward and away from the edge of the above graphic at 4.25%.  But with the increased volatility in the outlook, we'd lean more toward locking, EVEN THOUGH that volatility can swing both ways.  It's just that the risks that pricing can move far enough away from the current market that a deal might not even be feasible afterward.  Normally, we approach floating as a calculated risk based on the assumption that if the float doesn't pan out, we can plan on only losing an eighth in rate.  But when the potential losses move beyond a mere .125% and with Best-Execution in the low 4's, risks begin to outweigh benefits.  The possibility that rates get lower in spite of the increased disposition to lock is part of the frustration of  dealing with volatility.  But better safe than sorry. 

Remember that any mention of floating really only applies to those scenarios who are flexible enough to run the risk of paying more closing costs, a higher rate, or potentially losing a deal altogether.  All others shouldn't really try to beat the market when rates are as close as they are to all time lows.