Mortgage Rates Continue Rising From Historic Lows

By: Matthew Graham •

Mortgage Rates continued upward today, this time at a slightly faster pace than yesterday.  That said, the day-over-day change would have much to do with whether or not a particular lender underwent a negative reprice yesterday afternoon, and many did.  If we consider today's rates against yesterday's post-reprice levels, the change is less eventful, but between yesterday and today's losses, many lenders have moved up from a 3.625% Best-Execution Level to 3.75% on 30yr Fixed Conventional Loans.  

(Read More:What is A Best-Execution Mortgage Rate?)

Much like yesterday, today's news and events did little to motivate market movements although stock markets seemed to improve and hold those gains after the release of a national report on the services sector (ISM Non-Manufacturing Report on Business).  In actuality, the report was mixed, as it showed a weaker reading on employment despite a small improvement in business activity.  Bond markets were less noticeably stirred than stocks.  

 See Rates from Lenders in Your Area

All told, the weakest market levels of the day for bond markets were in before 9am and the rest of the day was spent bouncing around in a reasonably narrow range.  As such, we haven't had the same sort of negative reprices from lenders seen yesterday, just slightly weaker rates to begin the day and no changes from there on out.

Short Term Guidance: Two consecutive days of worse rates, but keep in mind that Friday was the best day ever.  In the big picture, we're not far from all-time lows, and really, anything under a 3.875% Best-Execution rate is historically exceptional.  The recent weakness could merely be the beginning of a trend back toward 3.875% or we could soon reverse course and head back to Friday's levels.  Bernanke speaks on Thursday and this is a potentially market moving event if he offers any additional clarity on further quantitative easing possibilities.

Long Term Guidance: We'd continue to advocate not trying to "get ahead" of current market movements as a high degree of uncertainty is pervasive.  While it's a reasonably safe assumption that European concerns will generally help rates stay lower than they otherwise would be, that "otherwise would be" part is very much a moving target.  Best bet is to focus on the fact that rates are at their all time lows, and can change quickly based on events that aren't "scheduled" or able to be forecast.  Risk vs reward for floating vs locking looks a bit larger than we'd like, but not out of the question for those who understand the risks and have an exit strategy if things don't go their way.

Loan Originator Perspective With Rates At All Time Lows

Jeff Statz, Mortgage Advisor,  Network Funding, L.P.

The slide yesterday has tapered into a narrow sideways range. This nominal range could be storing energy. Since the selling has mitigated, I'm optimistic about pricing for the next couple days.

Ted Rood, Senior Mortgage Consultant,  Wintrust Mortgage

Rates off their lows of last week, but still able to pay all costs on many loans at 3.75%. Bottom line is that pricing has much more room to worsen than it does to improve at this point. Anyone at 5% or higher (especially with equity and/or an FHA loan) should definitely be investigating a refinance before the market turns on us!

Bob Van Gilder, Originator / LO,  Finance One Mortgage

Not much Earth shattering news today. (yeah we still have Europe, election on radar...) Rates remain favorable. If you missed an eighth in rate and can still lock in a money saving rate, do so. CA peeps--- VOTE.

Jason York, Vice President of VA Operations at Prime Mortgage Lending, Inc

For those that haven't locked, unless you are in a tight situation, I would be leaning more towards floating and paying close attention as to where this range leads us. Just be ready to pull the trigger if you don't have a long time to recover and are running short of time.

Today's BEST-EXECUTION Rates 

  • 30YR FIXED -  3.75%
  • FHA/VA -3.75%
  • 15 YEAR FIXED -  3.125 edging down to 3.00%
  • 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
  • Rates could easily move higher or lower, but given the nearness to all time lows, there's generally 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.
  • (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).