Mortgage Rates Manage Slight Improvements To Begin The Week

By: Matthew Graham •

After moving higher on Friday afternoon, Mortgages Rates eased back down to Thursday's levels, leaving them in slightly better shape than most of last week's offerings depending on the lender.  Unlike Friday's abrupt, late-day weakness, today's underlying market movements for mortgages have been especially calm, prompting a few of the lenders in our survey to release improved rate sheets in the afternoon.  

Even so, the improvements are only minor, and leave the Conventional 30yr Fixed Best Execution Rate at 4.0%.  That means that today's improvement was not seen in RATES themselves, but rather in the COSTS required to obtain those rates.  Remember that in cases where the lender is paying for a portion of your closing costs that our reports of "lower costs" would simply mean that the lender can possibly pay additional closing costs.

 See Rates from Lenders in Your Area

Buydowns to 3.875% remain too steep to make sense for most borrowers, and would need to get closer to the buydown that currently exists from 4.125% to 4.0% in order to vie for the Best-Execution title.  That said, some lenders would be able to structure scenarios lower than 4.0%.   (read more about Best-Execution calculations).  

If you'd been considering locking a rate on Thursday only to see rates move higher on Friday, you now will have hopefully recouped those losses.  Today is like last Thursday in other ways as well.  Like then, we're still seeing the same risk that bond markets and MBS (the "mortgage-backed securities" that most directly influence mortgage rates) have "run out of steam," in a way.

What had been some well-timed defensiveness heading into Friday is replaced by similar defensiveness ahead of tomorrow's FOMC minutes (which provide a closer look at the Fed's discussion before their last policy announcement) and the rest of the week of data. Important employment-related data starts on Wednesday and culminates with Friday's major Employment Situation Report.

Looking at today as basically a "gimmee," we still feel that betting on lower rates is to hope that the data turns out to be economically worse-than-expected or that a news headline rattles market confidence and drives better demand for fixed income investments like MBS.  Ultimately, Friday's Jobs Report is the "biggie," and will serve to either accelerate or undo some of the progress or deterioration created in the first four days of the week.  

Today's BEST-EXECUTION Rates

  • 30YR FIXED -  4.0%
  • FHA/VA -3.75%
  • 15 YEAR FIXED -  3.25%-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
  • We're currently further away from the very best levels than we have been in recent months
  • We've broken away from a long, stable trend and are expecting greater volatility
  • Rates could easily move higher or lower, but given the above facts, there seems to be more risk than reward regarding floating
  • (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).