For most lenders, you’d have to go back to late June in order to see mortgage rates any higher than they were today, although several lenders did offer improvements as market conditions allowed in the afternoon. Additionally, there really wasn’t much upward movement in rates from yesterday. Rather, this is simply the culmination of a slow, steady move higher over the past 2 weeks. For now, the worst side effect of this gradual movement is that it’s finally bringing conventional 30yr fixed rates back up to 3.5% on top tier scenarios. 3.375% is still widely available, but 3.5% is now slightly ‘more available.’
In the bigger picture, the current week is better characterized as ‘sideways,’ despite the fact that today’s rates happened to be the highest of the month. Keep in mind that mortgage rate movement is primarily a factor of underlying market movement, and underlying markets actually made it back to positive territory by the end of the day. It’s no surprise that mortgage rates didn’t make it back, however. Lenders have generally been lagging market movements–sometimes simply waiting for the next business day before reacting to market volatility. In such an environment, there continues to be lower incentive to delay locking in the hopes of market improvement. In fact, until and unless we see more commitment to a move back toward lower rates, we’re still technically in an uptrend, and should accordingly lean toward locking.
Today’s Best-Execution Rates
- 30YR FIXED – 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).