Mortgage Rates Slightly Improved; Continue to Hold Range

By: Matthew Graham •

Mortgages Rates continued to operate in the same range that has dominated the past three weeks although the closing costs associated with prevailing rates fell slightly.  The net effect is that rates are very slightly lower, very close to the best offerings of the week.

Depending on your point of view, recent trends in mortgage rates have been frustrating or fantastic.  On the one hand, rates continue to operate very near all time lows.  In fact, 3.875% is the lowest stable Best-Execution rate we've recorded and it has been available again these past few weeks despite 4.0% constituting a more efficient combination of payment vs cost.  

But the gap in costs between 4.0% and 3.875% rates is such that fewer lenders can offer the popular "no closing cost" quote at 3.875%.  In this sense, the stability has been frustrating for those that have been waiting for things to get just slightly better.  Despite the frustration, this is normal behavior for rates at these levels, i.e. "increasing difficulty in moving lower from this range."

 See Rates from Lenders in Your Area

To say that the underlying markets have been subdued this week would be a huge understatement.  Treasuries and MBS (the Mortgage-Backed-Securities that most directly influence rates) have traded in their narrowest ranges in recent memory.  Even as last week closed out, the current week looked like sort of a dud considering its relative lack of data/events and that the following week contains the extremely important FOMC Announcement.

We continue to look toward next week's FOMC Announcement on Wednesday as a high-risk event, but would note for the risk-takers in the audience, that "risk" doesn't necessarily have a negative connotation.  We don't know if next week makes rates go higher or lower.  We do know that there's more potential for their movement to be much greater than this week.  The safest rationale combines that truth with the fact that rates have indeed had a hard time getting much lower from current levels.  It COULD happen, but even if it does, those who locked "too early" would likely not miss out on as difference in monthly payment as those who locked "too late."

Today's BEST-EXECUTION Rates 

  • 30YR FIXED -  3.875%-4.0%
  • FHA/VA -3.75%
  • 15 YEAR FIXED -  3.125-3.25%
  • 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
  • We've recently spent time further away from the very best levels of the past few months having broken away from a long, stable trend.
  • That led us to expect greater volatility, and indeed we got it!
  • But now that volatility MIGHT be depositing us back in a sideways range near all-time lows
  • Rates could easily move higher or lower, but given the nearness to all time lows, there's generally 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).