Mortgage Rates Edge Slightly Lower Ahead Of Employment Reports

By: Matthew Graham •

Mortgage rates moved gently lower on Tuesday amid relatively calm market conditions.  There was little if anything for markets to digest in the first place today, though that will change in the last 3 days of the week.  For now, it leaves rates very close to all-time lows with Best-Execution still 3.25-3.375%. 

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

With little changing in terms of rates or even the news affecting rates, yesterday's commentary is worth a read if you didn't catch it (read it here!).  The important part is this: Friday's jobs data is big deal on any month, but with the past three Octobers being particularly nasty for mortgage rates, it warrants a somewhat higher degree of defensiveness ahead of time. 

 See Rates from Lenders in Your Area

In other words, just be prepared for rates to move higher if the jobs report surprises to the upside (upside = more jobs created vs expectations).  Although we wouldn't expect rates to move too far before Friday's data, it's not uncommon to see things begin to "lead off" in one direction or another.  With that in mind, tomorrow morning's data can cause some early bets to be placed as to how Friday will turn out.  This isn't always the case and isn't always bad for rates, but the bottom line is that risks of volatility increase with the arrival of tomorrow's data.

Long Term Guidance: While the recently high degree of uncertainty remains very much intact, the Fed's decision to specifically target Mortgage-Backed-Securities in a third round of Quantitative easing provides a supportive undertone for mortgage rates.  We'd still advocate not trying to get too far ahead markets.  In other words, we wouldn't try to guess how low or how high rates might go before changing course.  For now, the trend is supportive and positive for rates, but we're watching it closely for the same sort of paradoxical responses that occurred in 2010.  Things look different this time around, but a lot of that has to do with Europe.  Rates remain near all time lows and risks of volatility remain high.  Those factors suggest that you stay vigilant regarding the day-to-day swings in mortgage rates.  If you're floating, set a limit as to how high rates would have to go before you cut your losses and locked.  Similarly, set a target of how low rates would have to get before you lock.

Loan Originator Perspectives

"For purchase clients getting into contract this week, we're locking them at all-time record lows and nobody's hesitating. Some refi clients are again starting to slip into the "I'll hold for lower" mindset which has been common this year as rates have declined. The no-cost refi option is best for these clients. Lower rate, no fees, and therefore free to refi again if rates drop further still. Each client has to review this math with their lender. " -Julian Hebron, Branch Manager, Loan Agent, RPM Mortgage.

"The only loans i would recommend locking are those within 15 days of closing. I would even recommend floating those overnight especially if your lender has not repriced better today. Most lenders have, but quite a few are holding back on passing along the improvements." -Victor Burek, Benchmark Mortgage

Today's Best-Execution Rates

  • 30YR FIXED - 3.25%
  • FHA/VA - 3.25% (varies more between lenders than conventional 30yr Fixed)
  • 15 YEAR FIXED -  2.75%
  • 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
  • Rates could easily move higher or lower, but given the nearness to all time lows, there's generally more risk than reward regarding floating
  • This 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).