Building an Ongoing Case For A New Wall in Mortgage Rates

We've spoken in the past about "walls" that crop up in the course of Mortgage Rate movements.  We're now seeing a similar case for 4.25% as it continues to insulate borrowers from higher rates even during the recent (October) weakness in mortgage rates.  It looked at risk as we took somewhat of a beating yesterday but markets were able to undo a reasonable amount of that damage today.  Rates aren't quite as good as they were on Wednesday afternoon, but after yesterday's drama, it's a relief to merely be improved.

Best-Execution won't necessarily have improved for every scenario, but at the very least, you should see a reduction in closing costs if your note rate is unchanged today.  Lender offerings again became more stratified as we start to push back from "the wall" at 4.25% 

Today's Rates: 

• BESTEXECUTION 30YR FIXED -   4.25% but more 4.125% today.
• FHA/VA - 3.875%.  Some 3.75's out there, fewer 4.0's
• 15 YEAR FIXED -  3.5-3.625%
• 5 YEAR ARMS -  low 3% range, huge variations from lender to lender.

Today's Guidance: Yesterday we noted that lenders may not move rates much today even if markets were active.  That was indeed the case as 4.25% is still the prevalent Best-Execution rate even though the secondary mortgage market erased yesterday's losses.  Even so, the improvements seen today could provide some much-needed relief  for anyone who didn't lock earlier in the week.  The biggest positive indication from this week is that the new "wall" at 4.25% continues to hold.  Some other positive news seems to be that whether or not it continues to hold may actually have more to do with DOMESTIC events next week as opposed to unexpected and unscheduled headlines out of Europe.  Don't get us wrong, the latter remains a concern and a threat, but with an FOMC Announcement and an Employment Report next week, things at home are extremely important (and markets will view them as extremely informative).   That's not a guarantee that rates will improve though, just a note that we might be able to observe more connection between scheduled economic data and market movements.  Locking and Floating remains the same kind of game it has been...  Rates in the low 4's, locking is the default guidance.  Aggressive floaters with the fortitude to lose money if the market moves against them (or lose the deal altogether) are still waiting for a 4.375% Best-Execution (broken "wall") move before being forced into locking.  On the other hand, if you picked up an extra eighth of a point in rate today, it's worth considering that each additional eighth will be harder to get until AFTER next week's events (and they'd have to be generally economically negative for rates to improve).

(Keep in mind, if a scenario is anything other than flawless in every way, a note rate can certainly be over 4.25% these days.  Read the disclaimer at the bottom of the post if you need more clarification).