Mortgage Market Update 11/2012

Nov 16 2012, 2:57PM

Mortgage rates continued to bounce back, moving lower for a second straight day after rising on the first two days of the week.  Net/net, the movement brings rates back almost perfectly to last Friday’s levels on average.  That means that best-execution is easily available at 3.375% and increasingly so at 3.25% depending on the lender and scenario.

We noted yesterday that the first two days of the holiday-shortened week were something of a concern as mortgage markets underperformed broader bond markets.  Yesterday was the first promising day of reversing that trend, and it continued to moderate today.

Markets were helped along by a barrage of headlines that had significant effects on stocks and bonds alike.  Everything seemed to be fair game today as European concerns moved the averages overnight, weak economic data helped rates move lower in the morning and geopolitical tensions in the Mid-East continued to move things in the same direction (good for rates, bad for stocks).  That trend was resoundingly reversed by positive comments from Congressional leaders after meeting with the President regarding the Fiscal Cliff.  Stocks responded the most, and bond markets, including the Secondary Mortgage Market, were able to hold on to a good amount of the days improvement.

Loan Originator Perspectives

“Investor uncertainty continues as rates improve slightly. As long as the fiscal cliff debate looms, the flight to safety (and low rates) should continue. Be cautious if floating, but there’s still a LOT of unknowns, and that means pricing will be good!” –Ted Rood, Senior Originator, Wintrust Mortgage.

“Mortgage backed securities managed a little rally today, but after the release of initial rate sheets. Some lenders did reprice better but the vast majority have left rate sheets unchanged. That said, plus my belief that lenders tend to be conservative on Friday, i would recommend floating over the weekend.” –Victor Burek, Benchmark Mortgage.

“Investor uncertainty continues as rates improve slightly. As long as the fiscal cliff debate looms, the flight to safety (and low rates) should continue. Be cautious if floating, but there’s still a LOT of unknowns, and that means pricing will be good!” –Bromi Krock, Loan Consultant, Prospect Mortgage.

Today’s Best-Execution Rates

• 30YR FIXED -3.375%
• FHA/VA – 3.25% (varies more between lenders than conventional 30yr Fixed)
• 15 YEAR FIXED –  2.875% – 2.75%
• 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
• Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally more risk than reward regarding floating
• This will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn’t always mean they’re done improving.
• (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).