Mortgage Rates Sharply Sideways

Mortgage rates were essentially unchanged today.   Whereas rates where sharply lower on Friday (after being sharply higher on Wednesday morning, lower on Wednesday afternoon, and higher on Thursday morning), the only thing sharp about today's movement is the razor-like precision with which most lenders changed hardly anything about last week's latest rate sheets.  Bond market activity is the precursor for more exciting interest rate movement and bond markets are tuned out after last week's jobs report failed to clearly suggest the next move.  Naturally, this keeps 30yr Fixed best-execution at 4.5% with buydowns to 4.25% making sense for some borrowers in some scenarios (paying extra up front cost in exchange for lower monthly cost).

When it comes to "the next move," what we're really waiting for is a consensus to form on when the Fed will begin reducing its asset purchases, and for the Fed to actually announce it.  Much of the damage will be done by the time that happens, and much of the determination will be made by the incoming economic data--chiefly, the Employment Situation Report (or "jobs report" for short).  The equivocal message in Friday's report sets us adrift in the recent range of rates, with more conviction likely to surface in the following two weeks before building to a head leading in to the next jobs report in early September.  That may give the impression that rates are flattening out here, but we have yet to see any evidence that the longer-term trend higher is defeated.

Loan Originator Perspectives

"One of the least eventful days in recent memory in rate markets today. After last week's dramatic daily swings, we'll take sedate on a Monday. Looks like Wed/Thurs treasury auctions, and Thursday's weekly jobless claims are most liable to influence rates this week, but we expect low volume and volatility, nice chance for borrowers and originators to catch their collective breaths." -Ted Rood, Senior Originator, Wintrust Mortgage

"Employment data continues to be the catalyst for rate movement. July 5th's jobs report set the tone for recent rate highs AND lows as we haven't gone much lower than the days leading up to that report or higher than that day itself.  The most recent jobs report on Friday simply reinforced this same range.  Between now and the next report, quick moves between the extremes of that range are fair game.  So although we're not going sharply higher or lower today, prospective borrowers should be aware that a quarter of a point move in either direction on any given day would still be inside the confines of this range .  -Justin Dudek, Mortgage Professional, Supreme Lending

Today's Best-Execution Rates

• 30YR FIXED - 4.5%
  
• FHA/VA - 4.25%
  
• 15 YEAR FIXED -  3.625%-3.75%
  
• 5 YEAR ARMS -  3.0-3.25% depending on the lender

Ongoing Lock/Float Considerations

• After rising consistently from all-time lows in September and October 2012, rates challenged the long term trend higher, but failed to sustain a breakout
• Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher
  
• Fears about the Fed's bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed indicated their intention to taper bond buying programs sooner vs later
• The June 19th FOMC Statement and Press Conference confirmed the suspicions.  Although tapering wasn't announced, the Fed made no move to counter the notion that they will decrease bond buying soon if the economic trajectory continues
• Rates Markets "broke down" following that, as traders realized just how much buy-in there was to the ongoing presence of QE.  These convulsions led to one of the fastest moves higher in the history of mortgage rates and market participants have not been eager to be the among the first explorers to head back into lower rate territory until they're sure they'll have some company.
• (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from 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).