Mortgage Rates Maintain Record Low Range to Begin 2012

By: Matthew Graham •

Mortgage Rates are slightly higher to begin the new year, but Best-Execution levels remain intact at 3.875%.  That being the case, most loan scenarios quoted last week would have the same interest rate, but simply require slightly higher closing costs. 

Today was fairly uneventful in terms of news, economic data, and market reaction.  Both Treasuries and Mortgage-Backed-Securities moved in fairly contained ranges, and volume is still in the process of ramping back up after falling off a cliff over the holiday weeks.  That ramping-up process should continue into Friday's Employment Situation Report, the most important scheduled economic report of the month.

The world "scheduled" is important in the above assertion.  In fact, it has been the unscheduled and unexpected headlines--usually European Debt Crisis-Related--that have done the most damage, or provided the most benefit to bond markets and indirectly, mortgage rates.  2012 changes nothing in terms of our domestic markets remaining woefully beholden to events from across the pond.  This makes the overall and ongoing level of risk higher than it otherwise would be for the simple fact that there's a higher chance of market movements at random times (opposed to the pre-European debt crisis days where larger market movements more often coincided with scheduled economic data, Treasury Auctions, or FOMC policy announcements.  We'd continue to advocate keeping this risk in mind in conjunction with the fact that rates remain n

 See Rates from Lenders in Your Area

Today's BEST-EXECUTION Rates

  • 30YR FIXED -  3.875%, glimpses of 3.75% at the top few lenders.
  • FHA/VA -3.75%
  • 15 YEAR FIXED -  3.375%
  • 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates and costs continue to operate near all time best levels
  • Current levels have experienced increasing resistance in improving much from here
  • There are technical reasons for that as well as fundamental reasons
  • Lenders tend to get busier when rates are in this "high 3's" level and can throttle their inbound volume by raising rates or costs.
  • While we don't necessarily think rates are destined to go higher, given the above facts, there seems to be more risk than reward regarding floating
  • But that will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn't always mean they're done improving.