Mortgage Rates Right in Line with 1.5-Year Lows

Mortgage rates moved lower again today, solidifying yesterday's tentative break back into the "high 3's" for top tier 30yr fixed rates.  In fact, in terms of end-of-day rate sheet data, today's rates are actually the lowest in more than a year and a half.  The only instance of lower rates came during the morning of October 15th, before the afternoon saw rapid deterioration.  

All that having been said, lender pricing is highly stratified during this move because of the holiday.  Not all lenders have improved pricing as much as the average lender, and the average lender hasn't improved pricing nearly as much as they would during a normal week.  That generally more cautious strategy is an unfortunate reality during holiday weeks, but it does mean that if financial markets are in similar shape come Monday, that rate sheets should improve a bit more.

Whether or not markets are able to hold steady (or better) is another matter.  Monday could look completely different for markets, for better or worse.  Combine that with the fact that many lenders are in the best shape of the year and there's a good case to be made for locking in these gains.  That, of course, assumes you have the ability to do so with a lender that's actually passing them along.  Otherwise, the risk/reward outlook for floating is more balanced.

Loan Originator Perspective

"I would typically look to lock to preserve these gains heading into the long holiday weekend, but based on what we have seen over the last few trading sessions my perception is we are moving lower and are still owed from the past few days. Loans scheduled to close in a 10-15 day window should be locked, however Monday may bring on better pricing, barring an extraordinary circumstance over the weekend. Happy Thanksgiving." -Constantine Floropoulos, Quontic Bank

"The market is improving, yet I'm not seeing it on rate sheets. It's very common to see lenders fail to pass along gains in front of a long holiday weekend, which we are heading into now. I'd suggest to float until next week, when we're more likely to see these gains. Have a great long weekend." Brent Borcherding, brentborcherding.com

"Despite the upcoming Holiday shortened week, lenders have passed along some of the gains but they could have been more generous. If closing within 15 days, might be wise to go ahead and lock, but all other closings i think should float until Monday." -Victor Burek, Open Mortgage

Today's Best-Execution Rates

• 30YR FIXED - 3.875-4.0
  
• FHA/VA - 3.5
  
• 15 YEAR FIXED -  3.125-3.25
  
• 5 YEAR ARMS -  3.0 - 3.50% depending on the lender

Ongoing Lock/Float Considerations

• The hallmark of 2014 has been a narrow range in rates.  Too many market participants bet on rates going higher in 2014, and markets punished that imbalance with a paradoxical move lower.
  
  
• European markets helped that process along and continue to play a prominent role in keeping US rates lower than they otherwise might be.  

• For most of the Summer and early Fall months, rates held a narrow range of 4.125% -4.25% (essentially where the 2014 rate recovery has bottomed out) and finally broke to a 3.875%-4.0% range in mid-October.  After correcting back to 4.125% briefly, November saw a calm, supportive trend that helped establish a ceiling.  From there, rates trickled back down into the high 3's by the end of the month.
  
  
• 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).