Mortgage rates improved significantly to kick off
the new year. The gains are a combination of actual improvement in bond
markets and lenders lowering their guard from conservative holiday pricing
strategies. In other words, lenders had been holding back a bit during
the holidays. That's normal and we'd discussed it as a factor. And
now, not only are those conservative strategies fading, but underlying bond
markets (which drive mortgage rates) are improving to boot.
The positive double-whammy brings rates in line with--or lower
than--anything else in the past 19 months. The most
prevalently-quoted conforming 30yr fixed rate for top tier borrowers is now
easily 3.875% and an increasing number of lenders are at 3.75%.
All that having been said, it's important to keep in mind that
markets aren't fully back up and running in terms of participation and
volume. While the holidays are behind us, many market participants won't
be back in the office until next week. We'll have to wait until
then to see if today's strength is the start of a new trend.
Loan Originator Perspective
"Happy New Year!!! Prior to the Christmas break, i
advised readers to float through the volatility that year end brings and look
to lock once 2015 is here. If you followed that advice, you will be happy when
you speak to your loan officer today. Rate sheets this morning are about as
good as i have seen in over a year. I rarely advise to lock on a Friday, but if
you are within 15 days of closing, i would strongly consider locking. If you
choose to lock today, i would wait until later in the day to allow lenders time
to pass along the morning gains. As of noon eastern, a handful of lenders have
already repriced for the better." -Victor Burek, Open Mortgage
"The first day of 2015 has been kind to mortgage rates
as we continue to incrementally improve on the best pricing we've seen in over
a year and a half. Is this a sign of things to come in the 1st quarter of the
year? Perhaps, but if I haven't locked my rate yet and my closing is coming in
the next few weeks I would be inclined to protect what's in front of me now and
lock. If my closing is much further out, floating may be safe but be wary of
the market and the many landmines that have a tendency to surprise us from time
to time and stay tuned in." -Hugh W. Page, Mortgage Banker, Seacoast Bank
"Rates improved again, on the first trading day of 2015
as manufacturing data pointed to slowing US growth. We're near our best pricing
since May, 2013, and floating borrowers might want to lock up the gains. The
long term trend still points downward, and those who missed the refi boat when
rates rose quickly in 2013 may want to call their favorite originator to check
pricing. Great time to be a borrower!" -Ted Rood, Senior Loan Originator,
MB Financial Bank
Today's Best-Execution Rates
30YR FIXED - 3.75 - 3.875
FHA/VA - 3.25
15 YEAR FIXED - 3.125
5 YEAR ARMS - 3.0 - 3.50% depending on the lender
Ongoing Lock/Float Considerations
The hallmark of 2014 was 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. This continues to
serve as a reminder that prevailing beliefs about where rates will go won't
necessarily be correct simply because they're the most prevalent.
European bond yields trended constantly lower in 2014, thus
playing a prominent role in keeping US rates lower than they otherwise might
be. Many feel that Europe will continue to slide until their central bank
engages in US-style quantitative easing. Some see this happening in early
2015. In any event, we're looking for a turn in Europe, first and
foremost, before worrying about the longer-term trend in bond markets being at
serious risk of reversing.
Much of 2014 could be considered "sideways to slightly
lower" in terms of mortgage rates. All things considered, it
actually has been a remarkably gentle drift lower. Things became less
gentle in mid October when rates briefly broke into the high 3's. They
came back for a more gradual, determined push into the 3's in December.
Some of the late-year strength was chalked up to an epic slump in oil
prices. This drags inflation expectations lower, which is a net-positive
for interest rates, but it could be debated as to whether oil prices were a
chicken or an egg in the global growth story.
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).
No comments:
Post a Comment