Mortgage Rates Unchanged to Slightly Lower

Mortgage rates edged microscopically lower today, though some lenders were unchanged from Tuesday's latest levels. this morning.   Bond markets (which set the tone for mortgage pricing) improved forcefully overnight, led by European bond markets.  That suggests lower rates to start the day, but markets began moving in the other direction just before lenders put out their first rate sheets of the day.  The net effect is the merely tepid improvement.  Lenders' caution was justified as bond markets never threatened to move back toward overnight levels.  The most prevalently-quoted conforming 30yr fixed rates remain 4.125% and 4.25% depending on individual details and the lender.

The rate outlook can be either encouraging or disheartening depending on how you choose to view it.  On the one hand, these rates are still near the lowest levels of 2014.  Additionally, rates have shown a remarkable ability to stay near those lows for a longer stretch of time than normal.  Finally, to whatever extent European turmoil (weak economic data and geopolitical risks) continues pushing European rates lower, the spillover effect is increasingly likely to help US rates move lower.

The disheartening view is much simpler.  In short, rates can't seem to break through the floor!  Whether we're talking about actual mortgage rates or the broad-scale posterchild for bond markets--the 10yr Treasury yield--both continue bumping into the same floors that blocked their progress in July.  Additionally, neither have made any serious attempt to get back below the 2014 lows seen in late May.

Loan Originator Perspective

"Once again, we hit the bottom of our recent range on rates today, then bounced slightly up. We've had a nice recovery from early last week, but there still hasn't been sufficient international drama or economic data to move rates past recent lows. We'll take it for now, cannot assume we'll break this range, even if borrowers and lenders have their fingers crossed that we will!" -Ted Rood, Senior Mortgage Planner, tedroodteam.com

"With rates the same to slightly better today, and with no significant data on the horizon for the rest of the week....I think floating remains a safe option. " -Brent Borcherding, brentborcherding.com

"Once again, the benchmark 10 year treasury note has been unable to hold the gains under 2.47. With this key pivot holding, I think those clients that are within 10 days should consider locking and taking advantage of the modest gains in today's rate sheets. I like floating everything else as I think we test the waters below 2.47 again." -Victor Burek, Open Mortgage

"Still in the range, until we are not. Locking at the lows is the sophisticated approach here, regardless of the trend. We are entering the end of the summer where we always have less participants trading and are always subject to traders perception. We have seen this song & dance with Europe too many times in the last 5 years. Locking is the best choice here for loans within a 15 day window, 30 days out should also book the rate before it's gone. The likelihood we break below the low 2.4's on 10's is slim to none, and slim is out of town." -Constantine Floropoulos, Quontic Bank

"This bounce in equities may be short lived for the geopolitical tensions are finally taking some air out of a market which forgot prices don't always go up. Should the S&P break below 1912 and the 10 year yield break below 2.40 rates may improve in a hurry."  -Manny Gomes, Branch Manager, Norcom Mortgage

Today's Best-Execution Rates

• 30YR FIXED - 4.125-4.25
  
• FHA/VA - 3.75%
  
• 15 YEAR FIXED -  3.375%
  
• 5 YEAR ARMS -  3.0-3.50% depending on the lender

Ongoing Lock/Float Considerations

• The hallmark of 2014 so far has been a disconcertingly narrow range in rates.  Too many market participants bet on rates going higher in 2014, and markets have punished that imbalance with a paradoxical move lower.
  
  
• As of June, rates were officially lower year-over-year, but that's due to rates' path higher in 2013.  The current path in 2014 remains sideways. 
  
  
• European markets continue to play a nagging role in the background, generally helping rates in the US remain lower than they otherwise might be. 
  
  
• From a wider point of view, we're in limbo, waiting for the first significant move away from the narrow range.  A rally into late May stood a chance to act as this break, but rates have since returned to what were previously the lower limits of the 2014 range.
  
  
• As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.'  Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy.  It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).