Mortgage Rates Improve For Third Straight Day

By: Matthew Graham •

After beginning the week in significantly worse shape, Mortgages Rates finish the week having fought back in small increments against that weakness in each of the past three sessions.  The losses on Tuesday (which was the beginning of the week due to the President's Day holiday) brought Best-Execution rates for 30yr Fixed Mortgages to 4.0% on average.  That was the first time in almost month!  But rates slowly fought their way back down to a point where 3.875% once again is the Best-Execution rate for the majority of lenders in our survey.  Read more about what that means in this previous post with more detailed discussion about Best-Execution calculations. 

We were prepared for some volatility today, primarily due to the inception of Greece's private sector debt swaps, wherein Greece would officially open the door for their private bond-holders to voluntarily accept the write downs (aka "haircuts") agreed to in a meeting at the beginning of the week.  Indeed the program was officially rolled out today, but we have yet to see any headlines that have moved markets much.  Thus, European issues haven't really registered in domestic market movements today.

 See Rates from Lenders in Your Area

Even the domestic economic data this morning failed to accomplish that task, despite reports on Consumer Sentiment and New Home Sales coming out slightly better than expectations.  In general, when various economic indicators are reporting results that are better than forecasts (i.e. fewer jobs lost, more consumer confidence, higher manufacturing index values), it tacitly suggests that current market levels may need to adjust to fall in line with a more upbeat economy.  This has traditionally translated to higher interest rates and higher stock prices.

But things are definitely different in this current financial era where European concerns reign supreme and the Fed has explicitly forecast "low rates through late 2014."  In this environment, we're seeing more and more examples of an improving domestic economy and rising stock prices, while Treasury and MBS (the "mortgage backed securities" that most directly influence mortgage rates) yields remain low.  Today is essentially "just another one of those days."  It was really quite bland, and that's fine by us considering said blandness resulted in improvements for Mortgage Rates.

Today's BEST-EXECUTION Rates

  • 30YR FIXED -  3.875% back in control.  4.0% still relatively prevalent
  • FHA/VA -3.75%
  • 15 YEAR FIXED -  3.25%
  • 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 operating near historic lows
  • (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).