Mortgage Rates Steady At All Time Lows

By: Matthew Graham •

Mortgage Rates held completely steady today keeping them in line with all time lows.  The stability in the mortgage market comes despite a decent amount of volatility in the broader markets.  That said, the market volatility is occurring in a range that is quite narrow in the slightly bigger picture, so while things are choppy in the short term, the relatively stable mortgage rates of late are a testament to the relatively contained nature of trading levels.  Naturally with rates being unchanged, Best-Execution remains at 3.625%

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

Adding to the short-term volatility today was a combination of economic data at home and headlines abroad, particularly with respect the the European debt crisis and speculation surround the upcoming "EU Summit" on Thursday and Friday.  In it, EU leaders and finance ministers will potentially discuss a closer fiscal union.  One of the day's most notable headlines came as somewhat of a response to that notion when Germany's chancellor Angela Merkel effectively said that EU states would not have shared liabilities as long as she is alive.  High drama in Europe these days...

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That drama continues to do two things for us.  On the positive side for prospective mortgage borrowers, the constantly looming potential of a Euro-led global economic collapse is helping to fuel demand for the safest assets--among them, Treasuries and Mortgage-Backed-Securities.  When demand for these is high, prices of the securities rise and rates fall.  Less positive though, is the volatility and 'reactionary behavior" it creates in markets.  Traders are constantly tuned in for the next major Euro-zone headlines, given that they're obviously not scheduled in advance.  The uncertain nature of trying to predict such things is one of the key underlying reasons for the "long term guidance" that we've been including daily.

Long Term Guidance: We'd continue to advocate against trying to "get ahead" of current market movements due to the high degree of uncertainty.  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 Perspectives

Julian Hebron, Branch Manager, Loan Agent, RPM Mortgage

Yesterday Matt said it well: "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." I spoke to these risks yesterday as well: rates can spike up as much as .375% on a given day when perception of economic data is better, then slowly tick back down. If you can't take this risk, lock these lows. If you want to float, authorize your loan agent to lock a preset target rate you guys determine based on your objectives and short to medium term market outlook.

Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage

My July pipeline is locked. Pricing is great, most clients prefer to take the money and not stress over bond market. Biggest issue I am seeing is increasing processing times. I'm having to remind borrowers we cannot process their loans until they return disclosures and the necessary documentation. Every day they wait, more loans go into processing in front of theirs!

Kent Mikkola, #353976, Mortgage Consultant, M&M Mortgage, LLC #213677

All time lows! Great time to lock in!

Jeff Statz, Network Funding, L.P.

More pondering about the EU markets is creating an uncertainty for mortgage bonds. MBS is looking for direction, and once its found, there is a large amount of stored energy available for release. Be wary of any EU news that can affect us. That, and the stock lever.

Today's BEST-EXECUTION Rates 

  • 30YR FIXED -  3.625%
  • FHA/VA -3.5% - 3.75%
  • 15 YEAR FIXED -  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).