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For a given interest rate, there are a range of costs at which it could still be a best-execution candidate.  Whereas Friday basically took these costs from the low side (about as low as they’d even been) to the high side, today’s improvements serve to moderate that movement back toward somewhat of a middle ground.  In another way of looking at things, you could think of the past three days as 3.875% best-ex rates being in question on Friday afternoon, but are “safe” once again, at least for today.

Indeed, “safety” is a relative term.  All we can ever truly know is what rates are available on the day we’re looking at them.  Even then, rates can change several times a day.  They don’t usually do this more than once a day, but it does happen.  While we don’t necessarily expect any violent movements in the near future, we can’t ever rule out potential volatility.  In that regard, we can at least identify the events and possibilities that could stand as the culprits for such volatility, in the same way we prepared for Friday’s jobs report as a high-risk event.

Of the high risk events this week, some are scheduled while others are not.  The key scheduled events are the US Treasury auctions this week, particularly the 10yr auction on Wednesday and the 30yr auction on Thursday (these two are more pertinent to the MBS–or “Mortgage Backed Securities”–market which most closely governs mortgage rates).  The other “potential event,” is a lingering LACK of resolution to an ongoing debate between Greece and it’s bond-holders to determine whether or not Greece will receive it’s next lump of bailout funds or face default.  It’s actually this uncertainty (Greece defaulting would be bad, economically speaking) that’s helping rates bounce back from Friday’s jobs data.

Today’s BEST-EXECUTION Rates

• 30YR FIXED -  3.875% mostly, less 3.75 today, 4.0′s getting closer
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.25%
• 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

• Rates and costs continue to operate near all time best levels
• Current levels have experienced increasing resistance in improving much from here
• There are technical reasons for that as well as fundamental reasons
• Lenders tend to get busier when rates are in this “high 3′s” level
  and can throttle their inbound volume by raising rates or costs.
• While we don’t necessarily think rates are destined to go higher,
  given the above facts, there seems to be more risk than reward regarding
  floating
• But that will always be the case when rates
  operating near historic lows
• (As always, please keep in mind
  that our talk of Best-Execution always pertains to a completely ideal
  scenario.  There can be all sorts of reasons that your quoted rate would
  not be the same as our average rates, and in those cases, assuming you’re following along on
  a day to day basis, simply use the Best-Ex levels we quote as a
  baseline to track potential movement in your quoted rate).

…(read more)

The monthly Employment Situation Report was released at 8:30am this morning, with much better-than-expected results.  Stocks rallied sharply and most every interest rate in fixed-income markets moved higher.  The economic optimism created by this sort of data tends to increase demand for riskier investments like stocks and lower demand for things like fixed-income notes and bonds.  MBS (the “mortgage backed securities” that most directly govern mortgage rates) fall into this fixed-income sector, and definitely weakened following the jobs data.  As a result, Mortgages Rates moved higher at their fastest pace in some time, traversing most of this week’s territory, but leaving Best-Execution rates mostly at 3.875%.  (learn more
about how we calculate Best-Execution in THIS POST). 

We’d said yesterday that MBS were looking like a runner in baseball taking a “lead-off,” waiting to find out whether or not the jobs data would be “a hit.”  We went on to say a stronger than expected report would result in MBS simply moving back to the safety of the base to wait for the next pitch.  That’s essentially what’s transpired today.  Our heroic little base-runner was clearly spooked by the data, and clearly backtracked to previous ground.  But in the process, we see “the base” metaphor emerging as a real possibility, in that markets weakened, but were able to dig in and hold firm after a certain point.  Bottom line, the runner is back on the base, but was not “tagged out,” at least not today.

The next pitches will be thrown next week in the form of US Treasury auctions.  While it’s true that mortgage rates are based on MBS and NOT on Treasuries, the Treasury Auctions are still a significant event for MBS, especially the longer maturity issues on Wednesday and Thursday.  Things are less certain on Monday and Tuesday, and it’s possible rates could be weaker if markets extend today’s movements against the backdrop of limited economic data on those first two days of the week.  We’ll know a lot more about how longer-term trends are evolving with the passing of at least the first important auction, Wednesday’s 10yr Notes.  Between now and then, 3.875% Best-Execution is STILL on the table, albeit at a higher cost than yesterday.  The point is that if you didn’t lock yesterday, today is not so much worse that you should just hold off indefinitely.  For those who are taking the risk floating into next week, things could get bumpy, but we’ll know a lot more about that on Wednesday. 

On a final note, we have to put out the constant caveat that European headlines do not adhere to a schedule and certainly have the potential to move markets in unexpected ways, by unexpected amounts, at unexpected times.

Today’s BEST-EXECUTION Rates

• 30YR FIXED -  3.875% mostly, less 3.75 today, 4.0′s getting closer
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.25%
• 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

• Rates and costs continue to operate near all time best levels
• Current levels have experienced increasing resistance in improving much from here
• There are technical reasons for that as well as fundamental reasons
• Lenders tend to get busier when rates are in this “high 3′s” level
  and can throttle their inbound volume by raising rates or costs.
• While we don’t necessarily think rates are destined to go higher,
  given the above facts, there seems to be more risk than reward regarding
  floating
• But that will always be the case when rates
  operating near historic lows
• (As always, please keep in mind
  that our talk of Best-Execution always pertains to a completely ideal
  scenario.  There can be all sorts of reasons that your quoted rate would
  not be the same as our average rates, and in those cases, assuming you’re following along on
  a day to day basis, simply use the Best-Ex levels we quote as a
  baseline to track potential movement in your quoted rate).

…(read more)

For the second day in a row, Mortgages Rates
are just slightly better than unchanged.  Best-Execution
remains at 3.875% for conventional 30yr fixed loans, and the slight
improvements seen today have benefited the borrowing costs required to
obtain those rates.   (learn more
about how we calculate Best-Execution in THIS POST).  Also in the same vein as yesterday, the stratification between lender offerings continues to lessen, and the improvement in our measurement of rates today reflects that consolidation more than a broad-based movement down in rate.  That said, 3.75% got a bit closer to vying for the Best-Execution crown.

The similarities to yesterday keep on coming…  MBS (the “mortgage-backed securities” that most
directly affect mortgage rates) pressed further into all-time highs today, almost like a runner in baseball taking a “lead-off.”  In this game, MBS are possibly waiting to find out whether or not tomorrow’s important jobs data is “a hit.”  If it’s weaker than expected, and by a significant enough margin to matter, interest could move lower based on their historical tendencies.  In that case, MBS would be well-positioned to steal the next base, thus helping to make the case for a 3.75% best-execution level.  But if the jobs report is stronger than expected, MBS could simply move right back to the safety of their base and wait for the next pitch.  In this case, the “base” would be the 3.875% best-execution rate for cream-of-the-crop 30yr fixed  loans. 

Now, it’s important to keep in mind that markets frequently buck historical trends, in essence, acting opposite the expectation.  So that’s another possibility for tomorrow, as well as the less-fun-to-imagine chance that MBS get “tagged out” before getting back to base.  It’s hard to imagine a runner that has been as strong and consistent as mortgage-rates have recently been, being dealt a major set-back, but it pays to be ready for anything.  To that end, and without any bias toward what might happen tomorrow, few if any savvy market watchers would find fault in locking an interest rate the day before an influential piece of economic data, when MBS have just traded to their all-time highs.  Some folks might prefer a riskier stance in the hopes of a rate-friendly jobs report tomorrow or some other future chance at a lower rate, but if you’re inclined to lock and/or have been on a fence, it’s about as good a time as we’ve seen considering the circumstances.

Today’s BEST-EXECUTION Rates

• 30YR FIXED -  3.875% mostly, increasing presence at 3.75%
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.25%, some lenders venturing lower, some completely stuck at 3.25%
• 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

• Rates and costs continue to operate near all time best levels
• Current levels have experienced increasing resistance in improving much from here
• There are technical reasons for that as well as fundamental reasons
• Lenders tend to get busier when rates are in this “high 3′s” level
  and can throttle their inbound volume by raising rates or costs.
• While we don’t necessarily think rates are destined to go higher,
  given the above facts, there seems to be more risk than reward regarding
  floating
• But that will always be the case when rates
  operating near historic lows
• (As always, please keep in mind
  that our talk of Best-Execution always pertains to a completely ideal
  scenario.  There can be all sorts of reasons that your quoted rate would
  not be the same as our average rates, and in those cases, assuming you’re following along on
  a day to day basis, simply use the Best-Ex levels we quote as a
  baseline to track potential movement in your quoted rate).

…(read more)

For the second day in a row, Mortgages Rates
are just slightly better than unchanged.  Best-Execution
remains at 3.875% for conventional 30yr fixed loans, and the slight
improvements seen today have benefited the borrowing costs required to
obtain those rates.   (learn more
about how we calculate Best-Execution in THIS POST).  Also in the same vein as yesterday, the stratification between lender offerings continues to lessen, and the improvement in our measurement of rates today reflects that consolidation more than a broad-based movement down in rate.  That said, 3.75% got a bit closer to vying for the Best-Execution crown.

The similarities to yesterday keep on coming…  MBS (the “mortgage-backed securities” that most
directly affect mortgage rates) pressed further into all-time highs today, almost like a runner in baseball taking a “lead-off.”  In this game, MBS are possibly waiting to find out whether or not tomorrow’s important jobs data is “a hit.”  If it’s weaker than expected, and by a significant enough margin to matter, interest could move lower based on their historical tendencies.  In that case, MBS would be well-positioned to steal the next base, thus helping to make the case for a 3.75% best-execution level.  But if the jobs report is stronger than expected, MBS could simply move right back to the safety of their base and wait for the next pitch.  In this case, the “base” would be the 3.875% best-execution rate for cream-of-the-crop 30yr fixed  loans. 

Now, it’s important to keep in mind that markets frequently buck historical trends, in essence, acting opposite the expectation.  So that’s another possibility for tomorrow, as well as the less-fun-to-imagine chance that MBS get “tagged out” before getting back to base.  It’s hard to imagine a runner that has been as strong and consistent as mortgage-rates have recently been, being dealt a major set-back, but it pays to be ready for anything.  To that end, and without any bias toward what might happen tomorrow, few if any savvy market watchers would find fault in locking an interest rate the day before an influential piece of economic data, when MBS have just traded to their all-time highs.  Some folks might prefer a riskier stance in the hopes of a rate-friendly jobs report tomorrow or some other future chance at a lower rate, but if you’re inclined to lock and/or have been on a fence, it’s about as good a time as we’ve seen considering the circumstances.

Today’s BEST-EXECUTION Rates

• 30YR FIXED -  3.875% mostly, increasing presence at 3.75%
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.25%, some lenders venturing lower, some completely stuck at 3.25%
• 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

• Rates and costs continue to operate near all time best levels
• Current levels have experienced increasing resistance in improving much from here
• There are technical reasons for that as well as fundamental reasons
• Lenders tend to get busier when rates are in this “high 3′s” level
  and can throttle their inbound volume by raising rates or costs.
• While we don’t necessarily think rates are destined to go higher,
  given the above facts, there seems to be more risk than reward regarding
  floating
• But that will always be the case when rates
  operating near historic lows
• (As always, please keep in mind
  that our talk of Best-Execution always pertains to a completely ideal
  scenario.  There can be all sorts of reasons that your quoted rate would
  not be the same as our average rates, and in those cases, assuming you’re following along on
  a day to day basis, simply use the Best-Ex levels we quote as a
  baseline to track potential movement in your quoted rate).

…(read more)