Archive for the ‘Mortgage Rate Watch’ Category

After failing on repeated occasions to extend a two-month rally, mortgage rates took the path of least resistance this week: UP

The BestEx levee burst.

In the chart of Consumer Rate Quotes below, if the line is moving up, closing costs are rising.  If the line is moving lower, costs are getting cheaper. Sideways mortgage rate behavior followed by an abrupt drop followed by another spell of mostly sideways activity can be seen when looking closely. This spell of sideways activity took place near the most aggressive rate quotes of the year.  Since setting new lows last Friday, consumer borrowing costs have risen sharply. 

Home loan borrowing costs clearly spiked this week...

The chart above compares the average origination costs (as a percentage of loan amount) for several available mortgage note rates as quoted by the five major lenders. Each line represents a different 30 year fixed mortgage note rate.  The numbers on the right vertical axis are the origination closing costs, as a percentage of your loan amount, that a borrower would be required to pay in order to close on that note rate. If the note rate graph line is below the 0.00% marker, the consumer may potentially receive closing cost help from their lender in the form of a lender credits. If the note rate line is above the 0.00% marker, the consumer should expect to pay additional points at the closing table to cover permanent buydown costs and origination fees. PLEASE SEE OUR MORTGAGE RATE DISCLAIMER BELOW

CURRENT MARKET*: The "Best Execution" conventional 30-year fixed mortgage rate has risen to 4.625%, but fewer lenders are readily quoting it after additional weakness was experienced today. More lenders are offering 4.75% instead (extra margin in rate sheets).  On FHA/VA 30 year fixed "Best Execution"  is still 4.375% but just barely, 4.50% is more willingly quoted.   15 year fixed conventional loans are best priced at 3.875%. Five year ARMs are still best priced at 3.25% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

GUIDANCE OFFERED LAST FRIDAY:  This is as good as it's been all year. Since the middle of November really.  If you're on a short lock/float timeline (15 days), now is a good time to considering locking. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before (recently) and failed to see investors commit to a sustained rally in the bond market. Our long-term outlook still supports the case for lower rates though, however until we see investors display a commitment to rally, we will be reluctant to advise floating in the short-term, especially with volatility only 2-days behind us.

CURRENT GUIDANCE:   Last week's guidance nailed it.  The path of least resistance is still up for interest rates, at least in the short-term. That puts us in a defensive posture for at least the next 10 to 20 days and creates an uncomfortable lock/float environment. Rate watchers have two choices: 1) lock up and get out now or 2) try to capitalize on a correction.  The former is the safe advice.  With respect to the latter, there will be ups and downs no matter which direction rates are trending.  And in the current environment, those swings can be BIG, as illustrated in the chart above. For the thrill-seekers out there, or the longer-term, more flexible scenarios, we haven't change our outlook for lower rates by the end of the summer. BEWARE: This is guidance is speculative in nature. We don't have a crystal ball, we can't predict the future, we can only share our outlook. Making the following considerations extra important........................

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.

Volatility attacked on Tuesday and attacked again today.

For the second time this week, home loan borrowing costs have risen about as much as they can without negatively impacting the CURRENT MARKET Best Execution Mortgage Rates. 

The abrupt jump in cost is again due to bond market volatility following a "technical breakdown." Read More from MBSonMND.

CURRENT MARKET*: The "Best Execution" conventional 30-year fixed mortgage rate has risen to 4.625%. Some lenders may already be quoting 4.75% though.  On FHA/VA 30 year fixed "Best Execution"  is 4.375% and potentially even 4.50% at some lenders (GNI pricing = better).   15 year fixed conventional loans are now best priced at 3.875%. Five year ARMs are still best priced at 3.25% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE:   After failing on repeated occasions to extend the two-month rally, mortgage rates are acting exhausted. That means the path of least resistance is up for interest rates, at least in the short-term. That puts us in a defensive posture for the next 10 to 20 days. We are not ready to change our outlook for lower rates by the end of the summer though. This corrective behavior happened last year too, which supports our long standing view that "history is repeating itself" in the bond market. 

CURRENT GUIDANCE:   Previous guidance nailed it: The path of least resistance is up for interest rates, at least in the short-term. That puts us in a defensive posture for the next 10 to 20 days.  And markets demonstrated that again today with sharp increases in costs.  You have two choices: 1) lock up and get out now, avoiding any ongoing volatility or 2) try to capitalize on a brief correction.  The former is the safe advice.  With respect to the latter, there will be ups and downs no matter which direction rates are moving.  And in the current environment, those swings can be BIG.  You're almost looking at another note rate higher in terms of Best-Execution quotes, so PROTECT THAT, especially if you can't afford to lose it.  For the thrill-seekers out there, or the longer-term, more flexible scenarios, we haven't seen anything yet that kills chances of lower rates by the end of the summer.  Bumpy ride in assessing that possibility though....  Making the following "rules of the game" doubly important.

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

SEE A CHART OF NEW YTD RATE LOWS

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.

Volatility attacks!

Home loan borrowing costs rose about as much as they could yesterday without having it negatively impact CURRENT MARKET Best Execution Mortgage Rate quotes.

Unfortunately borrowing costs rose further today. And the levee burst....

CURRENT MARKET Best Execution Mortgage Rates have risen. That means if you were being quoted a CURRENT MARKET "Best Execution" note rate yesterday, you will not be able to lock at the same Best Execution note rate today.

The abrupt spike in costs can be attributed to volatility in the secondary market.....

CURRENT MARKET*: The "Best Execution" conventional 30-year fixed mortgage rate has risen to 4.625%. Some lenders may still be willing to quote 4.50% but those offers are no longer widespread. Lenders quoting 4.375% are now charging at least a point.  These costs could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs.    On FHA/VA 30 year fixed "Best Execution"  has jumped from 4.25% to 4.375% and potentially even 4.50% at some lenders (GNI pricing = better).   15 year fixed conventional loans are now best priced at 3.875%. Five year ARMs are best priced at 3.25% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE:   As volatility continues in the secondary market, we remind rate watchers that lenders are known to price loans from a defensive stance when the broader bond market is in limbo. It might seem safer to float when lenders are defensive by default,  especially if you're able to act quickly and are somewhat flexible with respect to the risk of slightly higher closing costs, but floating is really best reserved for those operating on a longer-term timeline. This creates a buffer to allow for corrections when/if the market moves in an unfavorable direction. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before and failed to see investors commit to a sustained rally in the bond market.

CURRENT GUIDANCE:   After failing on repeated occasions to extend the two-month rally, mortgage rates are acting exhausted. That means the path of least resistance is up for interest rates, at least in the short-term. That puts us in a defensive posture for the next 10 to 20 days. We are not ready to change our outlook for lower rates by the end of the summer though. This corrective behavior happened last year too, which supports our long standing view that "history is repeating itself" in the bond market.  BEWARE: This is guidance is speculative in nature. We don't have a crystal ball, we can't predict the future, we can only share our outlook. Making the following considerations extra important........................

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

SEE A CHART OF NEW YTD RATE LOWS

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.

Volatility attacks!

Home loan borrowing costs rose about as much as they could yesterday without having it negatively impact CURRENT MARKET Best Execution Mortgage Rate quotes.

Unfortunately borrowing costs rose further today. And the levee burst....

CURRENT MARKET Best Execution Mortgage Rates have risen. That means if you were being quoted a CURRENT MARKET "Best Execution" note rate yesterday, you will not be able to lock at the same Best Execution note rate today.

The abrupt spike in costs can be attributed to volatility in the secondary market.....

CURRENT MARKET*: The "Best Execution" conventional 30-year fixed mortgage rate has risen to 4.625%. Some lenders may still be willing to quote 4.50% but those offers are no longer widespread. Lenders quoting 4.375% are now charging at least a point.  These costs could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs.    On FHA/VA 30 year fixed "Best Execution"  has jumped from 4.25% to 4.375% and potentially even 4.50% at some lenders (GNI pricing = better).   15 year fixed conventional loans are now best priced at 3.875%. Five year ARMs are best priced at 3.25% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE:   As volatility continues in the secondary market, we remind rate watchers that lenders are known to price loans from a defensive stance when the broader bond market is in limbo. It might seem safer to float when lenders are defensive by default,  especially if you're able to act quickly and are somewhat flexible with respect to the risk of slightly higher closing costs, but floating is really best reserved for those operating on a longer-term timeline. This creates a buffer to allow for corrections when/if the market moves in an unfavorable direction. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before and failed to see investors commit to a sustained rally in the bond market.

CURRENT GUIDANCE:   After failing on repeated occasions to extend the two-month rally, mortgage rates are acting exhausted. That means the path of least resistance is up for interest rates, at least in the short-term. That puts us in a defensive posture for the next 10 to 20 days. We are not ready to change our outlook for lower rates by the end of the summer though. This corrective behavior happened last year too, which supports our long standing view that "history is repeating itself" in the bond market.  BEWARE: This is guidance is speculative in nature. We don't have a crystal ball, we can't predict the future, we can only share our outlook. Making the following considerations extra important........................

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

SEE A CHART OF NEW YTD RATE LOWS

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.

Home loan borrowing costs rose about as much as they could today without having it negatively impact CURRENT MARKET Best-Execution Mortgage Rate quotes.

That means if you were being quoted a CURRENT MARKET "Best Execution" note rate yesterday, your closing costs rose a bunch today, but you should still be able to close at the same Best Execution note rate. Except if you're watching 15 year BestEx quotes. Those rose to 3.875%.

Sounds a little shocking doesn't it?  It seems like just last week we were resting peacefully at new year-to-date lows.  Now all of a sudden there's chaos?

Yep. The abrupt spike in costs can be attributed to volatility in the secondary market.....

PREVIOUS GUIDANCE:   As volatility continues in the secondary market, we remind rate watchers that lenders are known to price loans from a defensive stance when the broader bond market is in limbo. It might seem safer to float when lenders are defensive by default,  especially if you're able to act quickly and are somewhat flexible with respect to the risk of slightly higher closing costs, but floating is really best reserved for those operating on a longer-term timeline. This creates a buffer to allow for corrections when/if the market moves in an unfavorable direction. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before (as recently as Friday) and failed to see investors commit to a sustained rally in the bond market (today).

CURRENT GUIDANCE:      Although today's beating doesn't break longer term positive trends, it was certainly painful enough to make us question the stability of those positive trends. We'd describe this back-up as a "breather". Beware though, it's not uncommon for these "breathers" to last a few weeks.

CURRENT MARKET*: The "Best Execution" conventional 30-year fixed mortgage rate is just barely 4.50%. Lenders quoting 4.375% are now charging at least a point for that offer. These costs could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs. 4.625% is aggressive and will likely carry no origination fees.    On FHA/VA 30 year fixed "Best Execution"  is still 4.25%.  15 year fixed conventional loans are now best priced at 3.875%. Five year ARMs are best priced at 3.25% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

EXTRA PERSPECTIVE: We've been here before. Quite recently. Remember? Something similar to this "event" played out two-weeks ago (June 14th). A few days after setting YTD rate lows, loan pricing decided to throw up on itself because mortgage rates failed to commit to a sustained rally (we called it pouting).  This happened on a day when stocks managed to put together a healthy recovery rally, despite weak economic data (bond friendly data). Sounds a lot like today doesn't it? If you're not sure, the answer to that question is yes. What happened today was very similar to what happened two-weeks ago. And the market corrected shortly there-after. That provides some warmth after the beating we took place today but it doesn't mean the market will surely behave the same way it did two-weeks ago. Short-term floaters have much to lose too (gain in monthly payment), especially for higher loan amounts. We just set new YTD rate lows and now we're teetering on a shift higher in Best Execution Mortgage Rate quotes. Don't  lose your current rate quote here.  For long-term floaters, we're not ready to ring the alarm bell just yet.

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

SEE A CHART OF NEW YTD RATE LOWS

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.

We're back to and maybe even setting new year-to-date mortgage rate lows right now. These positive developments follow a short period of stagnation where volatility in the secondary mortgage market kept us on edge, but never really amounted to much on rate sheets. Loan pricing has drifted mostly sideways since setting new YTD lows on June 8th. And even though we didn't have far to travel, we're back to those lows again. And maybe even teetering on lower lows....

SEE A CHART OF NEW YTD RATE LOWS

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%. Some lenders may be quoting 4.375%, but that offer is aggressive and will likely carry increased closing costs in the form of origination fees.  These costs could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs.  On FHA/VA 30 year fixed "Best Execution"  is 4.25%.  15 year fixed conventional loans are best priced at 3.75%. Five year ARMs are best priced at 3.125% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE:   This is as good as it's been all year. Since the middle of November really.  If you're on a short lock/float timeline (15 days), now is a good time to considering locking. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before (recently) and failed to see investors commit to a sustained rally in the bond market. Our long-term outlook still supports the case for lower rates though, however until we see investors display a commitment to rally, we will be reluctant to advise floating in the short-term, especially with volatility only 2-days behind us.

CURRENT GUIDANCE:  As volatility continues in the secondary market, we remind rate watchers that lenders are known to price loans from a defensive stance when the broader bond market is in limbo. It might seem safer to float when lenders are defensive by default,  especially if you're able to act quickly and are somewhat flexible with respect to the risk of slightly higher closing costs, but floating is really best reserved for those operating on a longer-term timeline. This creates a buffer to allow for corrections when/if the market moves in an unfavorable direction. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before (as recently as Friday) and failed to see investors commit to a sustained rally in the bond market (today).

THE WEEK AHEAD:  Indecisive Attitudes Dictate Short-Term Directionality. Greece Headlines, Treasury Auctions  and the End of QEII. Read more about indecisive attitudes HERE.

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process

We're back to and maybe even setting new year-to-date mortgage rate lows right now. These positive developments follow a short period of stagnation where volatility in the secondary mortgage market kept us on edge, but never really amounted to much on rate sheets. Loan pricing has drifted mostly sideways since setting new YTD lows on June 8th. And even though we didn't have far to travel, we're back to those lows again. And maybe even teetering on lower lows....

SEE A CHART OF NEW YTD RATE LOWS

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%. Some lenders may be quoting 4.375%, but that offer is aggressive and will likely carry increased closing costs in the form of origination fees.  These costs could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs.  On FHA/VA 30 year fixed "Best Execution"  is 4.25%.  15 year fixed conventional loans are best priced at 3.75%. Five year ARMs are best priced at 3.125% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE:   This is as good as it's been all year. Since the middle of November really.  If you're on a short lock/float timeline (15 days), now is a good time to considering locking. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before (recently) and failed to see investors commit to a sustained rally in the bond market. Our long-term outlook still supports the case for lower rates though, however until we see investors display a commitment to rally, we will be reluctant to advise floating in the short-term, especially with volatility only 2-days behind us.

CURRENT GUIDANCE:  As volatility continues in the secondary market, we remind rate watchers that lenders are known to price loans from a defensive stance when the broader bond market is in limbo. It might seem safer to float when lenders are defensive by default,  especially if you're able to act quickly and are somewhat flexible with respect to the risk of slightly higher closing costs, but floating is really best reserved for those operating on a longer-term timeline. This creates a buffer to allow for corrections when/if the market moves in an unfavorable direction. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before (as recently as Friday) and failed to see investors commit to a sustained rally in the bond market (today).

THE WEEK AHEAD:  Indecisive Attitudes Dictate Short-Term Directionality. Greece Headlines, Treasury Auctions  and the End of QEII. Read more about indecisive attitudes HERE.

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process

We're back to and maybe even setting new year-to-date mortgage rate lows right now.

These positive developments follow a short period of stagnation where volatility in the secondary mortgage market kept us on edge, but never really amounted to much on rate sheets. Loan pricing drifted mostly sideways since setting new YTD lows on June 8th. And even though we didn't have far to travel, we're back to those lows again. And maybe even teetering on lower lows....

In the chart of Consumer Rate Quotes below, if the line is moving up, closing costs are rising.  If the line is moving lower, costs are getting cheaper. Sideways mortgage rate behavior followed by an abrupt drop followed by another spell of mostly sideways activity can be seen when looking closely. This spell of sideways activity has taken place near the most aggressive rate quotes of the year. Today is just as good a day as June 8th to lock. That is unless you're waiting for 4.25% (still).

See the RED CIRCLES.BEST LEVELS SINCE THE MIDDLE OF NOVEMBER.

The chart above compares the average origination costs (as a percentage of loan amount) for several available mortgage note rates as quoted by the five major lenders. Each line represents a different 30 year fixed mortgage note rate.  The numbers on the right vertical axis are the origination closing costs, as a percentage of your loan amount, that a borrower would be required to pay in order to close on that note rate. If the note rate graph line is below the 0.00% marker, the consumer may potentially receive closing cost help from their lender in the form of a lender credits. If the note rate line is above the 0.00% marker, the consumer should expect to pay additional points at the closing table to cover permanent buydown costs and origination fees. PLEASE SEE OUR MORTGAGE RATE DISCLAIMER BELOW

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%. Some lenders may be quoting 4.375%, but that offer is aggressive and will likely carry increased closing costs in the form of origination fees.  These costs could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs.  On FHA/VA 30 year fixed "Best Execution"  is 4.25%.  15 year fixed conventional loans are best priced at 3.75%. Five year ARMs are best priced at 3.125% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE:  As volatility continues in the secondary market, it's becoming apparent that lenders are pricing loans from a defensive stance.  Lenders are waiting for the secondary market to commit to a directional trend.  With today's high-risk event over, it might seem safer to float if lenders are pricing defensively by default.  And in fact, if you're able to act quickly and are somewhat flexible with respect to the risk of slightly higher closing costs, that can be a valid strategy here, but floating is best reserved for the longer term and most flexible scenarios here.  While there is potential upside even for short term outlooks, it's not likely to ratchet the Best-Execution rate down another 1/8th of a percent quickly enough to be worth the risk.

CURRENT GUIDANCE:  This is as good as it's been all year. Since the middle of November really.  If you're on a short lock/float timeline (15 days), now is a good time to considering locking. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before (recently) and failed to see investors commit to a sustained rally in the bond market. Our long-term outlook still supports the case for lower rates though, however until we see investors display a commitment to rally, we will be reluctant to advise floating in the short-term, especially with volatility only 2-days behind us.

A PEEK AT THE WEEK AHEAD: The week begins at a brisk pace with Personal Income and Spending right off the bat at 830 on Monday morning  Soon after we'll be preparing for the week's Treasury auction cycle, starting early this time with $35bn 2s at 1pm. 5’s and 7’s arrive in a similarly early fashion, on Tuesday and Wednesday. While the auction cycle will certainly be one of the week’s focal points, there’s an interesting twist to the calendar of events ahead.... Thursday is the last day of the month, the quarter, the half, and of QE2. Adding a few layers of complexity to that situation will be a diverse line-up of Fed Speakers not to mention the ongoing potential for tapebomb news headlines. Otherwise there’s nothing earth-shattering on the data docket, we get Consumer Confidence, Pending Home Sales, Chicago PMI, Consumer Sentiment and the ISM Manufacturing Index, just to name a few. We look most forward to seeing Consumer Confidence and ISM as these are early indicators of June data to come. Regarding the markets, investors haven't been displaying much directional commitment lately. With benchmark 10-year yields rallying to new YTD lows today (which mortgages did not keep up with), we'll be looking for a confirmation rally early and often next week.

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process

Some stored energy was released today.

Loan pricing improved.

And now we're back to the best mortgage rate levels of the year.

These positive developments follow a short period of stagnation where volatility in the secondary market kept us on the edge of our seats, but never really amounted to much on rate sheets. Loan pricing has actually drifted mostly sideways since setting new YTD lows on June 8th. We didn't really have to travel far to get here, but we're back again.

In the chart of Consumer Rate Quotes below, if the line is moving up, closing costs are rising.  If the line is moving lower, costs are getting cheaper. Sideways mortgage rate behavior followed by an abrupt drop followed by another spell of mostly sideways activity can be seen when looking closely. This spell of sideways activity has taken place near the most aggressive rate quotes of the year. Today is just as good a day as June 8th to lock. That is unless you're waiting for 4.25% (still).

See the RED CIRCLES.BEST LEVELS SINCE THE MIDDLE OF NOVEMBER.

The chart above compares the average origination costs (as a percentage of loan amount) for several available mortgage note rates as quoted by the five major lenders. Each line represents a different 30 year fixed mortgage note rate.  The numbers on the right vertical axis are the origination closing costs, as a percentage of your loan amount, that a borrower would be required to pay in order to close on that note rate. If the note rate graph line is below the 0.00% marker, the consumer may potentially receive closing cost help from their lender in the form of a lender credits. If the note rate line is above the 0.00% marker, the consumer should expect to pay additional points at the closing table to cover permanent buydown costs and origination fees. PLEASE SEE OUR MORTGAGE RATE DISCLAIMER BELOW

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%. Some lenders may be quoting 4.375%, but that offer is aggressive and will likely carry increased closing costs in the form of origination fees.  These costs could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs.  On FHA/VA 30 year fixed "Best Execution"  is 4.25%.  15 year fixed conventional loans are best priced at 3.75%. Five year ARMs are best priced at 3.125% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE:  As volatility continues in the secondary market, it's becoming apparent that lenders are pricing loans from a defensive stance.  Lenders are waiting for the secondary market to commit to a directional trend.  With today's high-risk event over, it might seem safer to float if lenders are pricing defensively by default.  And in fact, if you're able to act quickly and are somewhat flexible with respect to the risk of slightly higher closing costs, that can be a valid strategy here, but floating is best reserved for the longer term and most flexible scenarios here.  While there is potential upside even for short term outlooks, it's not likely to ratchet the Best-Execution rate down another 1/8th of a percent quickly enough to be worth the risk.

CURRENT GUIDANCE:  This is as good as it's been all year. Since the middle of November! If you're on a short lock/float timeline (15 days), now is a good time to considering locking. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before (recently) and failed to see investors commit to a sustained rally in the bond market. Our long-term outlook still supports the case for lower rates, but until we see investors display a commitment to rally, we will be reluctant to advise floating in the short-term, especially with volatility only 1-day behind us.

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process

Some stored energy was released today.

Loan pricing improved.

And now we're back to the best mortgage rate levels of the year.

These positive developments follow a short period of stagnation where volatility in the secondary market kept us on the edge of our seats, but never really amounted to much on rate sheets. Loan pricing has actually drifted mostly sideways since setting new YTD lows on June 8th. We didn't really have to travel far to get here, but we're back again.

In the chart of Consumer Rate Quotes below, if the line is moving up, closing costs are rising.  If the line is moving lower, costs are getting cheaper. Sideways mortgage rate behavior followed by an abrupt drop followed by another spell of mostly sideways activity can be seen when looking closely. This spell of sideways activity has taken place near the most aggressive rate quotes of the year. Today is just as good a day as June 8th to lock. That is unless you're waiting for 4.25% (still).

See the RED CIRCLES.BEST LEVELS SINCE THE MIDDLE OF NOVEMBER.

The chart above compares the average origination costs (as a percentage of loan amount) for several available mortgage note rates as quoted by the five major lenders. Each line represents a different 30 year fixed mortgage note rate.  The numbers on the right vertical axis are the origination closing costs, as a percentage of your loan amount, that a borrower would be required to pay in order to close on that note rate. If the note rate graph line is below the 0.00% marker, the consumer may potentially receive closing cost help from their lender in the form of a lender credits. If the note rate line is above the 0.00% marker, the consumer should expect to pay additional points at the closing table to cover permanent buydown costs and origination fees. PLEASE SEE OUR MORTGAGE RATE DISCLAIMER BELOW

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%. Some lenders may be quoting 4.375%, but that offer is aggressive and will likely carry increased closing costs in the form of origination fees.  These costs could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs.  On FHA/VA 30 year fixed "Best Execution"  is 4.25%.  15 year fixed conventional loans are best priced at 3.75%. Five year ARMs are best priced at 3.125% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE:  As volatility continues in the secondary market, it's becoming apparent that lenders are pricing loans from a defensive stance.  Lenders are waiting for the secondary market to commit to a directional trend.  With today's high-risk event over, it might seem safer to float if lenders are pricing defensively by default.  And in fact, if you're able to act quickly and are somewhat flexible with respect to the risk of slightly higher closing costs, that can be a valid strategy here, but floating is best reserved for the longer term and most flexible scenarios here.  While there is potential upside even for short term outlooks, it's not likely to ratchet the Best-Execution rate down another 1/8th of a percent quickly enough to be worth the risk.

CURRENT GUIDANCE:  This is as good as it's been all year. Since the middle of November! If you're on a short lock/float timeline (15 days), now is a good time to considering locking. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before (recently) and failed to see investors commit to a sustained rally in the bond market. Our long-term outlook still supports the case for lower rates, but until we see investors display a commitment to rally, we will be reluctant to advise floating in the short-term, especially with volatility only 1-day behind us.

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process