Mortgage Rates Continue Pushing July Lows

Mortgage rates continued modestly lower for the 5th straight day, further extending Friday's push to the lowest levels of July.  Even so, most borrowers will see the same rates on lenders quotes, with the improvements in the form of lower closing costs compared to Friday.  The most prevalently quoted conventional 30yr fixed rates remain in a range between 4.0 and 4.125% for top tier scenarios.  Recent gains help more and more lenders move to the lower end of that range, while a very small minority are at 3.875%.

Last week's caution still applies: any time we see this many positive days in a row, rates are increasingly likely to pull back.  This will only become more true if rates continue to improve, but there is no implicit commentary about how long such a pull-back would last or how far it would go.  Any way you slice it, the lock/float outlook is less intense than it had been earlier in the month (meaning things are looking better), but the lowest rates in more than a month are always arguably a good opportunity to lock.

Loan Originator Perspective

"Our recent trend continued today, as both mortgage rates and treasury yields fell again. As stocks falter globally, bonds become more attractive. There is nothing wrong with locking at the best pricing in a month, but risk tolerant borrowers may harvest further gains by floating, as long as the trend continues. The Fed statement on Wednesday will certainly impact rates; if you're floating, discuss pros/cons of locking with your loan officer by Wednesday AM." -Ted Rood, Senior Originator

"Global stock sell off has helped US rates improve further today in a flight to safety trade. I have been favoring locking over the last couple weeks as the gains seem somewhat unjustified in light of US economic data and the Feds insistence to raising rates this year. Any reversal of the recent moves will most likely be swift as rates always rise faster than they fall. I think locking is still the prudent call, but not totally opposed to floating as long as you understand the risks. Always remember, it is better to lock when you should have floated, then to float when you should have locked." -Victor Burek, Churchill Mortgage

"During the last two weeks we've experienced pretty steady improvement in mortgage pricing in the face of no real definitive explanation for it. Certainly some global economic weakness may explain some of it but we've seen several positive data pieces as well. I would be defensive in this environment locking in anything closing in the next 30 days. Beyond that, I would defer to the borrower's risk tolerance. Sharp reversals can be painful if you're not ready for them." -Hugh W. Page, Mortgage Banker, SeacoastBank

"Rates improved again today and are now near the end of June beginning of July before rates began to increase. This tells me we may test those levels and fail or we may break them and the rally in mortgage rates may continue. With the Fed meeting taking place this week it may make sense to wait things out before taking action." -Manny Gomes, Branch Manager Norcom Mortgage

Today's Best-Execution Rates

• 30YR FIXED - 4.0-4.125%
  
• FHA/VA - 3.75-4.0
  
• 15 YEAR FIXED - 3.25%-3.375%
  
• 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

• 2015 began with a strong move to the lowest rates seen since May 2013.  The catalyst was Europe and the introduction of European quantitative easing.  The next four bullet points are currently more of a reflection about the first half of the year.  July still has a chance to be the month where rates held their ground against 2015's initial push higher.
  
  
• It's a highly uncertain time for global financial markets.  There is much debate over whether or not the global economy is turning a corner (for the better), thus justifying a widespread move to higher rates.  That's made 2015 significantly more volatile than 2014 for markets.  This means lender rate sheets may change appreciably from day to day, and sometimes even several times in the same day.
  

• Bottom line: European Quantitative Easing helped push global rates to all-time lows in April.  Now, the big risk for mortgage rate watchers is that we might have turned a long term corner.  That risk is being compounded by speculation about the Federal Reserve raising rates by the end of 2015.
  
  
• May and June have amounted to the 2nd major move higher bounce so far this year.  Every time this happens, we have to consider the possibility that this will be a big-picture, long-lasting correction.  Until such a thing can be ruled out, Locking makes far more sense.  July has thus far provided an opportunity to consider such a big-picture correction might be on hold. 
  
  
• 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, conventional 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).