Mortgage Rates Back to August Lows

Mortgage rates improved again today, bringing them back in line with the lowest levels of the month.  Considering that today is only the 10th day of the month, that might not mean too much, but indeed today's rates are right in line with lowest levels in more than 30 days.  Increasingly, lenders are able to quote 3.375% on top tier conventional 30yr fixed scenarios.  Some of the most aggressive lenders are back to 3.25%, but such quotes are almost non-existent compared to the 3.375%-3.5% range.  

In the bigger picture, before this week, there was good reason to worry that rates might be breaking higher out of narrow range stretching back to late June.  But in just a few days, we're already close to the lower side of that range.  At the very least, we can say we've seen a solid bounce off the proverbial ceiling.  At this point, we're closer to hoping for a break through the proverbial floor.

Loan Originator Perspective

Bonds continue to add to their recent gains following todays solid 10 year treasury auction.   We have one more auction tomorrow, then new supply is done for a couple weeks.  It is pretty common for bonds to continue to improve once all supply has been absorbed by the markets.  So, I continue to favor floating here to see if these gains can be added to tomorrow.  -Victor Burek, Churchill Mortgage

Bonds built on yesterday's gains as more evidence of global economic weakness appeared today.  There is little, if any, evidence of inflation in "meaningful" economies (Venezuela and Zimbabwe don't count as meaningful) and as long as that's the case, low rates will be the norm.  While we haven't broken into "post Brexit" territory yet, the trend may now be towards lower rates.  I'm inclined to float new loans, and in no huge hurry to lock those in my pipeline.  Doesn't mean rates won't go back up, because they will, just thinking it won't be soon. -Ted Rood, Senior Originator

Today's Best-Execution Rates

• 30YR FIXED - 3.375 - 3.5%
  
• FHA/VA - 3.25%
  
• 15 YEAR FIXED - 2.75%
  
• 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

• In the biggest of pictures, "global growth concerns" remain the driving force behind the long-term trend toward lower rates

• Amid that trend, periodic corrections toward higher rates can and will happen.  These can happen for no apparent reason, or they can be brought on by changes in expectations surrounding central bank policy at home and abroad, as well as geopolitical and systemic risks
  
  
• Time horizon and risk tolerance are 2 variables to consider when it comes to locking.  If you have plenty of time and don't mind losing some ground, set a limit as to how much higher rates could go before you'd lock to avoid further losses, and then float in the hopes of never seeing that limit.
   
• In the shorter-term, it's always good to look for lock opportunities after rates have been moving lower or sideways repeatedly, especially if they've since begun to move back up in any sort of consistent way. 
   
• 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).