Mortgage Rates Vary By Lender, Stubbornly Flat Overall

By: Matthew Graham •

Mortgage rates were mixed, leaning toward slightly improved to begin the holiday-shortened week.  Several lenders' rate sheets were slightly worse than Friday's while a majority were unchanged to slightly better.  A worse-than-expected report on Existing Home Sales helped interest rates hold their ground.  Despite the moderate improvement overall, it hasn't been enough to affect the Best-Execution levels for 30yr Fixed, Conventional loans, which continue to hover near 3.5% since Thursday.

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

Both before and after the Home Sales data, MBS (the "mortgage backed securities" that most directly affect mortgage rates) were relatively flat.  Along with Treasuries, MBS have been recovering from a sharp sell-off last Thursday which took Best-Execution from 3.375% to 3.5%.  When MBS "sell-off," it means that the price fell and yield (or interest rate) moved higher. 

 See Rates from Lenders in Your Area

While it does seem that bond markets (of which MBS are a part) were behaving a bit cautiously ahead of the three day weekend, MBS haven't been as quick to bounce back as Treasuries.  The last time Best-Execution rates rose to 3.5%, the move back in the other direction, though small, was immediate and steady.  In general, moves toward 3.5% would connote more opportunity for floating until such time that Best-Ex moves up to 3.625%, effectively breaking the range of rates that's prevailed for more than 6 months.

But in the current case, we're not seeing the same immediate, steady move back in the other direction that typically suggests we're bouncing off the high end of the range.  There's still a possibility we'll get that bounce, but it's inherently more risky to plan on such things this time around.  We'd stay more cautious than the last visit to 3.5%.  Here's a more detailed assessment of the potential "rising rate environment."

Loan Originator Perspectives

"We're continuing to lock rates for clients who are ready (meaning they've provided all of their income and asset documentation). Upside rate risk outweights downside benefit at this time. " -Julian Hebron, Branch Manager, RPM Mortgage

"MBS pricing bounced up slightly today on lukewarm data and a flat stock market. We're still in the same range, actual interest rates haven't changed, just the amount available for lenders to pay costs for borrowers. In most cases, that's the biggest day to day market change. For instance, I priced a loan on Friday and could pay $1200 of my client's costs. Today it was $1700 for the same loan. Always nice to call my clients with news like that!" -Ted Rood, Senior Originator, Wintrust Mortgage.

Today's Best-Execution Rates

  • 30YR FIXED - 3.5%
  • FHA/VA - 3.25% (varies more between lenders than conventional 30yr Fixed)
  • 15 YEAR FIXED -  2.875% - 2.75%
  • 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates have risen moderately from their all-time lows, making for relatively increased reward for floating at the expense of greater risks of loss.
  • Rates could easily move higher or lower, and unscheduled, unexpected events can ultimately have the most say in the direction.
  • Near term risks in 2013 include the upcoming debt-ceiling debate in Washington as well as the Fed's policy outlook regarding securities purchases.
  • Prospects For Extending The Debt Ceiling Deadline currently seem to be preventing a move back down in rate.  Passage of such legislation could further support a rising rate environment.
  • (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).