Best Day of the Year for Mortgage Rates

Mortgage rates fell at their fastest pace in 2014 and to their best levels.  Such a feat was only manageable due to what has been an exceptionally flat market up to this point.  Even today's move was fairly small by historically standards, equating to only 0.03 percent in terms of rate.  That means that the improvements over yesterday would be seen in the form of lower closing costs with interest still averaging 4.625% for ideal, conforming 30yr Fixed loans (best-execution).

To put the recent flatness in more perspective, there have only been 3 days in the past 30 where rates moved any more than they did today.  It continues to be the case that the events in the latter half of the week (beginning tomorrow morning) have more potential to break the monotony, or rather, to continue breaking the monotony that was preemptively broken today. 

Whereas the movement seen so far in 2014 has largely been a product of market participation ramping back up, the upcoming movement may be more motivated by the tenor of the economic data.  As such, strong data can push rates back toward recent highs while weak data could help this correction/bounce continue.

Loan Originator Perspectives

"Rates continued to improve today adding to the gains from yesterday. As of the time I write this, most lenders have yet to pass along any of the improvements. As stated yesterday, as the week continues, the data becomes much more market moving which makes floating very risky. At this point, there isn't much to be gained unless the data is down right horrible which is unlikely. I would advise and am advising clients to lock in later today especially if they are within 30 days of closing." -Victor Burek, Open Mortgage

"As we conjectured yesterday, we got some additional pricing gains today. The bulk of this week's MBS "meal" starts tomorrow with a salad of ADP December Employment and December Fed minutes. The entrée arrives Friday AM when Decembers' NFP jobs report is released. Nice to see improvement, but it's nothing definitive at the moment. If you floated the last 2 days, you've gained some house money. Whether you want to roll the dice again depends on personal risk tolerance!" -Ted Rood, Senior Originator, Wintrust Mortgage

"Based on the latest rate movements, we may see some more improvements. Maybe the race to 3% on the 10 year was premature, but then again good numbers this week for jobs and we blow by 3%. Cautiously float but realize big risks. " -Michael Owens, VP of Mortgage Lending at Guaranteed Rate, Inc. NMLS # 107434

Today's Best-Execution Rates

• 30YR FIXED - 4.625%
  
• FHA/VA - 4.25%
  
• 15 YEAR FIXED -  3.5%
  
• 5 YEAR ARMS -  3.0-3.50% depending on the lender

Ongoing Lock/Float Considerations

• The prospect of the Fed reducing its asset purchases weighed heavy on interest rates for the 2nd half of 2013, causing volatility and generally pervasive upward movement.
  
• Tapering ultimately happened on December 18th, 2013.  Markets had done so much to come to terms with it ahead of time that it essentially just confirmed the the 6 month move higher in rates, but didn't make for another immediate spike higher.
• That said, we should assume that we're still in a rising rate environment on average.
• NOTE: Lenders had begun adjusting rate sheets to account for the most recent announced hike in Guarantee Fees.  This would have unequivocally raised rates by at least an eighth of a percent for almost every borrower, and in most cases .25-.375%.  Those changes are now on hold indefinitely.  We won't know if they're coming back or not until we hear more official word from new FHFA Director Mel Watt.
  
• (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).