Mortgage Rates Flat To Modestly Higher, Long Term Sideways Trends Intact

Mortgage Rates moved slightly higher today but remained well within a narrow range resting on all-time lows.  Several lenders were actually unchanged day-over-day and others released improved rate sheets in the afternoon following strength in the secondary mortgage market.  Best Execution for Conventional 30yr Fixed Loans remains at 3.625%.

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

The bond markets that underlie mortgage rates have essentially refused to move too far in one direction or another, seemingly in anticipation of Thursday and Friday's EU Summit. The next two days also bring a slew of domestic economic data as well as the last two trading days in the month and quarter.  Month-end/quarter-end/year-end can garner additional attention and market movement for reasons not related to market fundamentals or technical trading levels.  

Just as was the case with the long stay at 3.875%, rates have been extremely sideways and borrowing costs have held an extremely narrow range around the current 3.625% Best-Execution rate.  This narrow range operates similarly to those seen in broader markets, building the sense that "everything" is sideways and not just mortgage rates.  The combination of the passing of month/quarter-end with the EU Summit could finally be the thing that nudges rates higher or lower.  

Keep in mind though, not only could we continue to go sideways, but at current levels of demand, lenders have limited incentive to cough up truly stellar improvements in the short term.  Depending on how large of a microscope you're willing to use to measure victories, floating a rate right now makes less sense the shorter your time frame.  Some might argue that the nearness to all-time lows justifies locking regardless of one's time frame.

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

Matt Hodges, Loan Officer,  Presidential Mortgage Group

No purchase loans are floating at this point - only some refinances without specific close dates. Once we name down appraisal receipt and underwriting approval, I am advising clients to lock immediately.

Borrowers who just got into contract to buy a home that's expected to close within 30-40 days should lock their rate at these lows. As for refinance borrowers, they're also well served to lock now. If they have strong reason to believe rates will drop further near to medium term, they can talk to their loan agents about no-cost refinances. A no-cost refi will have a slightly higher rate but if rates drop again, they can refi again and not have to worry about a second set of fees.

Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage

New day, same scenario. Rates have been pretty rangebound for much of June, prompted by European economic disharmony. Am advising most clients to lock if we have pricing we need at time of loan submission. Bigger concern is the continuing trend towards servicers' "risk off" attitude as they restrict taking on loans they don't currently service. Could result in borrowers having less choices for refinances and higher costs since many won't have the option of picking a new lender.

Bob Van Gilder, Finance One Mortgage

Rates remain favorable. If you are closing on a purchase in next 10 days- no harm/no foul in locking. If you are refinancing and have a tolerance for the unexpected (both upside and downside) float a bit. You MIGHT squeak out an extra eighth or additional credit towards closing costs.-

Victor Burek at Benchmark Mortgage

I continue to advise my clients to float til within 15 days of closing. That strategy has been quite successful for the last couple months; however, we do have a high risk event coming tomorrow and Friday with the EU summit. If they pull some kind of rabbit out of their hat, the market could get very happy and drive rates higher.

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).