Rates Lower Today, But Much Higher Than Last Week

Mortgage Rates managed to make modest gains today, moving just slightly lower for the average lender.  That's a welcome development after 10 straight days of higher rates, but it's more of a symbolic victory for now.  Reason being: most lenders are quoting the exact same rates as yesterday, with improvements limited to small adjustments in upfront costs.  In other words, rates are lower on average, but by such a small amount that the average borrower won't see a change.  3.625% continues as the most prevalent quote on top tier scenarios, up from 3.375% just 2 weeks ago.

Keep in mind, if you see any other articles on mortgage rates today (especially if the source is a major media outlet or a financial news site), that Freddie Mac's weekly rate report came out today.  It conveyed a surprisingly small amount of the actual rise in rates that's taken place over the past 2 weeks.  As always, remember that that Freddie's data is survey-based and that it pertains to survey responses received on Monday-Wednesday of any given week.  

Per Freddie Mac: "survey reminder emails are sent out on Mondays and lenders are asked to respond by close of business Wednesday."  That means that this week's responses could have been distorted by the Columbus Day market closure on Monday (lenders who responded would only have Friday's rates to reference), and that much of the impact from Tuesday's bigger jump in rates went undetected. 

Loan Originator Perspective

So far my optimism from yesterday is continuing today with bonds rallying.   With all the recent weakness we have had, I feel lenders will be very slow to pass along the gains.  So, I would continue to float overnight and check pricing tomorrow morning. -Victor Burek, Churchill Mortgage

After multiple days of interest rates setting higher highs and higher lows (really a gradual process over the last 2 months), bond markets got a little bit of relief today.  Typically we would break out the pom-poms and celebrate, but the concern is that today may just be a breather and some profit taking.  If this is the case, get ready because we are moving higher. If it's not a consolidation, it is currently unknown how strong the legs may be of this rally.  Locking in makes the most sense for loans with a 30 day window, 45 day closings should strongly consider locking here as well.  If we see a reversal, great, but based on the overall current momentum I'm not a believer.  -Gus Floropoulos, VP, The Federal Savings Bank

Bonds rebounded slightly today, posting only their 2nd day of gains since September 29th as auction demand for 10 year treasuries exceeded expectations.  I'm not ready to call one positive day an end to rates' upward trend, let's see about 3 days before we get too excited.  While it may be less imperative to lock ASAP, it's certainly far too early to expect further pricing improvements.  Float with caution, if at all. -Ted Rood, Senior Originator

The 10 Yr Treasury's welcome bounce off the top of the recent range yesterday has me recommending floating at this time.  Generally speaking, with a well-established range, float when bouncing off the top and lock when bouncing off the bottom. -Timothy Baron Licensed Loan Originator, NMLS #184671

Today's Best-Execution Rates

• 30YR FIXED - 3.5-3.625%
• FHA/VA - 3.25%
• 15 YEAR FIXED - 2.75-2.875%
  
• 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).