Archive for the ‘Mortgage Rate Watch’ Category

The Census Bureau and Department of Housing and Urban Development have released New Residential Sales data for May  2011.

New Residential Sales data provides statistics on the sales of new privately-owned single-family residential structures in the United States. Data included in the press release are (1) the number of new single-family houses sold; (2) the number of new single-family houses for sale; and (3) the median and average sales prices of new homes sold. New residential sales estimates only include new single-family residential structures. Sales of multi-family units are excluded from these statistics.

Here is a Quick Recap from Reuters...

• RTRS - US MAY SINGLE-FAMILY HOME SALES 319,000 UNIT ANN. RATE (CONS 310,000) VS APRIL 326,000 (PREV 323,000)
• RTRS - US MAY SINGLE-FAMILY HOME SALES -2.1 PCT VS APRIL +6.5 PCT (PREV +7.3 PCT)
  
• RTRS - US MAY HOME SALES NORTHEAST -26.7 PCT, MIDWEST UNCH, SOUTH +2.4 PCT, WEST -3.5 PCT RTRS
  
• RTRS - US MAY NEW HOME SUPPLY 6.2 MONTHS' WORTH AT CURRENT PACE VS APRIL 6.3 MONTHS RTRS
  
• RTRS - US MAY MEDIAN SALE PRICE $222,600, -3.4 PCT FROM MAY 2010 ($230,500)
  
• RTRS - US HOMES FOR SALE AT END OF MAY 166,000 UNITS, RECORD LOW, VS APRIL 172,000 UNITS

Sales of new single-family houses in May 2011 were at a seasonally adjusted annual rate of 319,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.

This is 2.1 percent (±10.7%)* below the revised April rate of 326,000, but is 13.5 percent (±13.6%)* above the May 2010 estimate of 281,000.

The median sales price of new houses sold in May 2011 was $222,600; the average sales price was $266,400. The seasonally adjusted estimate of new houses for sale at the end of May was 166,000. This represents a supply of 6.2 months at the current sales rate.

Honestly I don't know why we even cover this data anymore. It's like we're expecting to hear something different from the Commerce Department.

Do you see that blue histogram in the chart above? It estimates the amount of New Home Sales that will have occurred by the end of 2011 if sales continue at their current pace (Annualized). One thing you might notice about that histogram chart is its most recent additions look historically low in comparison to the housing boom of the mid-2000's. While the current pace of annualized sales is indeed above the record low of 278,000 seen in August 2010, at 319,000 we're not too far from the bottom! And we haven't been since April 2010 either, when the annualized pace was 420,000 New Home Sales. Same story different month....

Here's another fun fact if you're not satisfied. The "(±10.7%)" and "(±13.6%)" seen in this part of the report: "This is 2.1 percent (±10.7%)* below the revised April rate of 326,000, but is 13.5 percent (±13.6%)* above the May 2010 estimate of 281,000", represents the Standard Error of the survey results. When the Standard Error is bigger than the Commerce Department's estimation, we would say the survey results are "Statistically Insignificant". Meaning we don't know if New Home Sales actually increased or decreased in May. The survey data is telling us NOTHING!  A BETTER EXPLANATION

So on two accounts we learned nothing new about the residential construction market today. Well wait, there was one thing...

RTRS - NEW HOMES FOR SALE AT END OF MAY AT 166,000 UNITS. NEW RECORD LOW (PREVIOUS WAS APRIL 2011 AT 172,000 UNITS)

The new construction market has gone totally stagnate....

*A house is considered sold when either a sales contract has been signed or a deposit accepted.   Included in our estimates are houses for which a sales contract is signed or deposit accepted before construction has actually started; for instance, houses sold from a model or from plans before any work has started on the footings or foundations.  These estimates also include houses sold while under construction or after completion.  This survey does not follow through to the completion ("closing") of the sales transaction, so even if the transaction is not finalized, the house is still considered sold. Preliminary new home sales figures are subject to revision due to the survey methodology and definitions used. The survey is primarily based on a sample of houses selected from building permits.

Home loan borrowing costs today recovered a portion of the increases they experienced on Monday and Tuesday.  Once again these slight cost improvements came amidst a volatile backdrop. These are generally not favorable conditions for rate watchers as volatility in the secondary mortgage market puts lenders in a more defensive position than usual. That means we're not seeing aggressive loan pricing strategies on rate sheets.  Mortgage rate movements have gone stale.

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is still 4.50%. Some lenders may be quoting 4.50% with increased closing costs in the form of origination fees. Some lenders may also be quoting 4.375%, but those offers will definitely carry additional closing costs.  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:  "Volatility" in and of itself doesn't mean rates are more likely to get directionally better or worse, but it does mean lenders are more anxious about the potential for larger intraday loan pricing swings. This creates a defensive environment where rate sheets fluctuate in a wider range of offers.  If you can't afford (or don't want to afford) to risk what could be a meaningful increase in closing costs or even a .125% shift higher in rate, we're always in favor of protecting current offers, especially when rates are near their best levels in recent memory and high-risk, high-impact economic events are less than 24 hours away.  If you float through today into tomorrow, you're basically accepting any short-term rate/cost adjustments that take place following the market's reaction to those events.

CURRENT 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.

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

Home loan borrowing costs today recovered a portion of the increases they experienced on Monday and Tuesday.  Once again these slight cost improvements came amidst a volatile backdrop. These are generally not favorable conditions for rate watchers as volatility in the secondary mortgage market puts lenders in a more defensive position than usual. That means we're not seeing aggressive loan pricing strategies on rate sheets.  Mortgage rate movements have gone stale.

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is still 4.50%. Some lenders may be quoting 4.50% with increased closing costs in the form of origination fees. Some lenders may also be quoting 4.375%, but those offers will definitely carry additional closing costs.  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:  "Volatility" in and of itself doesn't mean rates are more likely to get directionally better or worse, but it does mean lenders are more anxious about the potential for larger intraday loan pricing swings. This creates a defensive environment where rate sheets fluctuate in a wider range of offers.  If you can't afford (or don't want to afford) to risk what could be a meaningful increase in closing costs or even a .125% shift higher in rate, we're always in favor of protecting current offers, especially when rates are near their best levels in recent memory and high-risk, high-impact economic events are less than 24 hours away.  If you float through today into tomorrow, you're basically accepting any short-term rate/cost adjustments that take place following the market's reaction to those events.

CURRENT 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.

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

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey* for the week ending June 17, 2011.

Although mortgage rates have rallied back to levels just above their all-time lows, home loan demand has largely failed to react to it.  The MBA did report a nice uptick in refinance applications in the week ending June 7th, and while this was exciting, even that jump failed to spark further momentum as the Refinance Index declined 7.2 percent in the most recent report.  Mortgage rates did however move higher last week, so besides all the barriers that contiue to block borrowers from reducing their monthly payments,  there is an explanation for the most recent slowdown.

Excerpts from the Release...

The Market Composite Index, a measure of mortgage loan application volume, decreased 5.9 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 6.2 percent compared with the previous week.  The four week moving average is up 0.4 percent.

The Refinance Index decreased 7.2 percent from the previous week. The four week moving average is up 0.8 percent. The refinance share of mortgage activity decreased to 69.2 percent of total applications from 70.0 percent the previous week.

The seasonally adjusted Purchase Index decreased 2.8 percent from one week earlier. The unadjusted Purchase Index decreased 3.9 percent compared with the previous week and was 4.4 percent higher than the same week one year ago. The four week moving average is down 0.7 percent.

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.57 percent from 4.51 percent, with points decreasing to 0.91 from 1.04 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.  The effective rate also increased from last week.  

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.70 percent from 3.67 percent, with points decreasing to 1.05 from 1.06 (including the origination fee) for 80 percent LTV loans. The effective rate also increased from last week.

The adjustable-rate mortgage (ARM) share of activity decreased to 5.9 percent from 6.1 percent of total applications from the previous week.

Regarding the barriers that continue to block borrowers from reducing their monthly payments...

Over a month ago we wrote, "Right now we're witnessing the beginnings of a mini-refinance boom in the primary mortgage market, but there has been little activity in the secondary market that would indicate increased rate locking by consumers." says MND's Managing Editor Adam Quinones. "However, if conventional 30-year rates reach 4.25%, we'd expect to see a mini-boom scenario play out. There is much stored demand in the system as many borrowers missed the boat on record low rates in October and early November. This crowd is waiting in the wings for those rates to return. Whether or not that happens is still very much up in the air"

In reaction to that comment, Ted Rood, a loan originator from MetLife Home Loans added, "One thing to consider regarding refi volume is that HUD effectively ended FHA streamlines over the course of the last year by tightening underwriting guidelines and jacking up monthly MIP fees. After the change, many existing FHA clients have been unable to meet net benefit rules,  even when dropping their rate by 1% or more, since their monthly MIP would double on the new loan. So FHA clients don't get to benefit from lower rates and HUD doesn't get new upfront MIPs from existing clients with clean payment histories who want to refinance".

READ MORE: New FHA MIP Structure to Slow Streamlines

READ MORE: Rents Seen Rising as Poor Credit Hurts Homeownership Demand

READ MORE: Realtors Request Looser Credit Regs as Home Sales Decline

* ABOUT: The MBA's loan application survey covers over 50% of all U.S. residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a snapshot view of consumer demand for mortgage loans. In a falling mortgage rate environment, a trend of increasing refinance applications implies consumers are seeking out lower monthly payments. If consumers are able to reduce their monthly mortgage payment and increase disposable income through refinancing, it can be a positive for the economy as a whole (may boost consumer spending. It also allows debtors to pay down personal liabilities faster. A trend of declining purchase applications implies home buyer demand is shrinking.

Home loan borrowing costs continue to hover near the best levels we've seen all year. Activity in the secondary mortgage market is getting more and more restless though as investors await an update from the Federal Reserve tomorrow and new developments in the Greek debt crisis. Intraday volatility has picked up as a result. This is important because lenders tend to price loans more defensively when volatility is a problem.

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is still 4.50%. Some lenders may be quoting 4.50% with increased closing costs in the form of origination fees. Some lenders may also be quoting 4.375%, but those offers will definitely carry additional closing costs.  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:  There's a weird feeling in the air. Stocks are teetering on a major technical breakdown and bonds smell fear but are waiting for new guidance to be offered. If stocks fail to mount a recovery rally in the near future, we could be looking at another leg lower in Best Execution mortgage rates. While this "feeling" ties together well with our long-term outlook, it's still speculative in nature and largely driven by headline news. We say that because the timing of such news headlines,  positive or negative,   is "at any moment". And until it the market is given new information, stocks are gonna put up a fight. This "scratching and clawing" in equities implies the potential for loan pricing volatility remains high. Remember, it was only last week when Best Execution Mortgage Rates were teetering on a shift higher because stocks had put together a decent intraday rally effort. We may have dodged a bullet, but we're not out of the woods yet. The past few days provide a perfect example of how quickly unfriendly fluctuations can occur in the mortgage market.

CURRENT GUIDANCE:  "Volatility" in and of itself doesn't mean rates are more likely to get directionally better or worse, but it does mean lenders are more anxious about the potential for larger intraday loan pricing swings. This creates a defensive environment where rate sheets fluctuate in a wider range of offers.  If you can't afford (or don't want to afford) to risk what could be a meaningful increase in closing costs or even a .125% shift higher in rate, we're always in favor of protecting current offers, especially when rates are near their best levels in recent memory and high-risk, high-impact economic events are less than 24 hours away.  If you float through today into tomorrow, you're basically accepting any short-term rate/cost adjustments that take place following the market's reaction to those events. ECON CALENDAR

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

Home loan borrowing costs are hovering near the best levels we've seen all year. Volatility has however picked up in the bond market.  Just last Tuesday rate watchers experienced a scare where it looked like Best Execution quotes were doomed to move higher. Those anxieties were however quickly alleviated as a flight to safety rallied benchmark bonds back to their lowest yields in nearly 7-months.

A "flight to safety" happens when investors are nervous about owning risky assets like stocks, but do not want to miss out on earning a return on their funds, so they allocate their money into risk-free government guaranteed U.S Treasury debt to provide a safe-haven and an investment return. As benchmark Treasury yields fall on "flight to safety" buyer demand, prices of mortgage-backed securities move higher in unison. This allows lenders to reprice their rate sheets for the better and gives originators an opportunity to offer fence-sitting borrowers lower mortgage rates or more competitive closing costs.

The chance that Greece may default on their government debt obligations has global investors running for safety...

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%. Some lenders may be quoting 4.50% with increased closing costs in the form of origination fees. Some lenders may also be quoting 4.375%, but those offers will definitely carry additional closing costs.  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. 

THE WEEK AHEAD:   Indecisive investor attitudes carry over into the week ahead where two major events are seen shaping outlooks. The U.S. Federal Reserve will conclude a two-day monetary policy meeting on Wednesday afternoon with the release of the FOMC Statement. We expect the Fed to confirm an end to its second Quantitative Easing program (QEII) and indicate that further quantitative easing measures are totally dependent on new economic data developments. The Fed's current stance calls for economic growth to pick-up in the 2nd half of the year. The other market moving event on the horizon is the ongoing Greek debt crisis.  Greek officials have said the country will face default by mid-July if the European Union and the International Monetary Fund do not release the next phase of bailout funds by then.  Over the weekend Euro-zone finance ministers delayed a final decision on extending those emergency loan funds to Greece until they agree on an aggressive plan to pay back debts. Since restructuring government leadership positions largely failed to improve national sentiment surrounding new spending cuts, Greek Prime Minister George Papandreou is now seeking government approval to enact his own austerity plan through a "vote of confidence", which will be taken on Tuesday night. Failing to agree on tough spending cuts would lead market participants to believe the Greeks are not serious about making long-term concessions to pay back their debt. This would be seen as a negative influence on stocks and a positive influence on mortgage rates. Other than those two stories, the economic calendar is pretty thin with no events on Monday and only Existing Home Sales on Tuesday. The FOMC Statement will be issued on Wednesday. Then on Thursday we get a regional business activity index (we got two bad updates last week) plus Jobless Claims and New Home Sales. The week wraps up on Friday with Final Q1 GDP and Durable Goods Orders.

CURRENT GUIDANCE:  There's a weird feeling in the air. Stocks are teetering on a major technical breakdown and bonds smell fear but are waiting for new guidance to be offered. If stocks fail to mount a recovery rally in the near future, we could be looking at another leg lower in Best Execution mortgage rates. While this "feeling" ties together well with our long-term outlook, it's still speculative in nature and largely driven by headline news. We say that because the timing of such news headlines,  positive or negative,   is "at any moment". And until it the market is given new information, stocks are gonna put up a fight. This "scratching and clawing" in equities implies the potential for loan pricing volatility remains high. Remember, it was only last week when Best Execution Mortgage Rates were teetering on a shift higher because stocks had put together a decent intraday rally effort. We may have dodged a bullet, but we're not out of the woods yet. The past few days provide a perfect example of how quickly unfriendly fluctuations can occur in the mortgage market.

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

A scary setback early in the week had us on the edge of our seats but home loan borrowing costs managed to recover thanks to a "flight to safety" in the bond market. This helped mortgage rates end the week near the same levels they closed at last Friday.

A "flight to safety" happens when investors are nervous about owning risky assets like stocks, but do not want to miss out on earning a return on their funds, so they allocate their money into risk-free government guaranteed U.S Treasury debt to provide a safe-haven and an investment return. As benchmark Treasury yields fall on "flight to safety" buyer demand, prices of mortgage-backed securities move higher in unison. This allows lenders to reprice their rate sheets for the better and gives originators an opportunity to offer fence-sitting borrowers lower mortgage rates or more competitive closing costs.

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 closer at the chart . More recently however a slight uptrend is noticeable, this is the "scary setback" we referenced above. Costs have however corrected from that slight spike.   Loan pricing is not as aggressive as it was on June 3rd (best day to lock all year so far), but we're getting closer to those levels again...

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 4.50% with increased closing costs in the form of origination fees. Some lenders may also be quoting 4.375%, but those offers will definitely carry additional closing costs.  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 recovery rally is encouraging from a big picture perspective as it keeps the door open for our longer-term bullish mortgage rate bias to extend deeper into the summer months. Still, short-term scenarios should take caution. The past few days provide a perfect example of how quickly unfriendly corrections can occur in the mortgage market. Hopefully these back-ups illustrate why we normally urge defensive short-term stances, even as rates improve.  We may have dodged a bullet, but we're not out of the woods yet. More bouts of volatility are very possible.

CURRENT GUIDANCE:  There's a weird feeling in the air. Stocks are teetering on a major technical breakdown and bonds smell fear but are waiting for new guidance to be offered. If stocks fail to mount a recovery rally in the near future, we could be looking at another leg lower in Best Execution mortgage rates. While this "feeling" ties together well with our long-term outlook, it's still speculative in nature. We say that because the timing of such a move is "at any moment". And until it happens, stocks are gonna put up a fight. This "scratching and clawing" in equities implies the potential for loan pricing volatility remains high. Remember, it was only three days ago when Best Execution Mortgage Rates were teetering on a shift higher because stocks had put together a decent intraday rally effort. We may have dodged a bullet this week, but we're not out of the woods yet. The past few days provide a perfect example of how quickly unfriendly fluctuations can occur in the mortgage market.

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

After experiencing a scary setback earlier in the week, home loan borrowing costs improved again today as a "flight to safety" continued to benefit bond yields.

A "flight to safety" happens when investors are nervous about owning risky assets like stocks, but do not want to miss out on earning a return on their funds, so they allocate their money into risk-free government guaranteed U.S Treasury debt to provide a safe-haven and an investment return. As benchmark Treasury yields fall on "flight to safety" buyer demand, prices of mortgage-backed securities move higher in unison. This allows lenders to reprice their rate sheets for the better and gives originators an opportunity to offer fence-sitting borrowers lower mortgage rates or more competitive closing costs.

Loan pricing is not as aggressive as it was on June 3rd (best day to lock all year so far), but we're getting closer to those levels again.

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%. Some lenders may be quoting 4.50% with increased closing costs in the form of origination fees. Some lenders may also be quoting 4.375%, but those offers will definitely carry additional closing costs.  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:  Today's recovery rally is encouraging from a big picture perspective as it keeps the door open for our longer-term bullish mortgage rate bias to extend deeper into the summer months. Still, short-term scenarios should take caution. The past few days provide a perfect example of how quickly unfriendly corrections can occur in the mortgage market. Hopefully these back-ups illustrate why we normally urge defensive short-term stances, even as rates improve.  We may have dodged a bullet today, but we're not out of the woods yet. More bouts of volatility are very possible.

CURRENT GUIDANCE:  There's a weird feeling in the air. Stocks are teetering on a major breakdown and bonds smell fear. If stocks fail to mount a recovery rally in the near future, we could be looking at another leg lower in Best Execution mortgage rates. While this "feeling" ties together well with our long-term outlook, it's still speculative in nature. We say that because the timing of such a move is "at any moment". And until it happens, stocks are gonna put up a fight, as proven by a modest recovery bounce today, which bonds mostly ignored. This "scratching and clawing" in equities implies the potential for further loan pricing volatility remains high. Remember, it was only two days ago when Best Execution Mortgage Rates were teetering on a shift higher because stocks put together a decent intraday rally effort. We may have dodged a bullet yesterday, but we're not out of the woods yet. The past few days provide a perfect example of how quickly unfriendly corrections can occur in the mortgage market. That makes the following guidance 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.

Home loan borrowing costs took a beating yesterday. The bond market's behavior was so unfriendly that Best Execution mortgage rates nearly shifted higher as a result. The main motivation behind this unfavorable directional display was a significant rally in stocks.  Although this market event didn't break any long-term positive trends, it was certainly scary enough to make one question the strength of those positive trends. Fortunately that skeptical stress was relieved today. Stocks erased all of yesterday's gains and the bond market recovered all its losses. Lenders repriced rate sheets for the better and home loan borrowing costs corrected. Best Execution mortgage rates didn't rise. Bullet dodged!

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is still 4.50%. Some lenders may be quoting 4.50% with increased closing costs in the form of origination fees.  This 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:   No sooner has the wall been torn down than the big bad financial markets are trying to scare lenders into building it back up.  Certainly, anything can happen, and while it's possible that rates move right back to the higher levels seen before "The Wall" came down,  the current level of weakness is consistent with past examples of the "short-term corrections" we've warned against.  The past few days provide an example of how quickly these corrections can happen and hopefully illustrate why we normally urge defensive stances even as rates improve.  There's an exceptional amount of risk involved in banking on continuation of the longer term rally, but recent weakness in rates hasn't ruled it out.   Still, short-term scenarios beware.  It's not uncommon for these "breathers" to last a few weeks.

CURRENT GUIDANCE:  Today's recovery rally is encouraging from a big picture perspective as it keeps the door open for our longer-term bullish mortgage rate bias to extend deeper into the summer months. Still, short-term scenarios should take caution. The past few days provide a perfect example of how quickly unfriendly corrections can occur in the mortgage market. Hopefully these back-ups illustrate why we normally urge defensive short-term stances, even as rates improve.  We may have dodged a bullet today, but we're not out of the woods yet. More bouts of volatility are very possible.

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.

The trend of increasing home loan borrowing costs that began last Thursday continued today. Best-Execution mortgage rates are on the verge of shifting higher as a result.

We'd still describe this current weakness as the longer term rates rally taking a "breather" after two months of strong improvements.  Perhaps it's more appropriate to say that the term "breather" still applies given the periodic pull-backs normally seen during extended rallies.  Although recent losses don't necessarily break the longer term positive trends, it's certainly enough to make one question those positive trends.

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is still 4.50%, but only barely. Some lenders may be quoting 4.50% with increased closing costs in the form of origination fees.  This 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:   With  "The Wall" now torn down a path has been paved for mortgage rates to continue on the path toward more improvements. An extended rally will not come without setbacks though. Short-term corrections are possible.  That means borrowers working on a shorter lock/float timeline should remain defensive of their current quotes. While the rally has indeed stalled, we still feel that intermediate to longer-term scenarios are justified in floating.  But we caution, with the politics of money and banking taking center stage into the summer months, your main goal is to protect new, lower rate quotes from unexpected market fluctuations. Stay-tuned for further developments....

CURRENT GUIDANCE:  No sooner has the wall been torn down than the big bad financial markets are trying to scare lenders into building it back up.  Certainly, anything can happen, and while it's possible that rates move right back to the higher levels seen before "The Wall" came down,  the current level of weakness is consistent with past examples of the "short-term corrections" we've warned against.  The past few days provide an example of how quickly these corrections can happen and hopefully illustrate why we normally urge defensive stances even as rates improve.  There's an exceptional amount of risk involved in banking on continuation of the longer term rally, but recent weakness in rates hasn't ruled it out.   Still, short-term scenarios beware.  It's not uncommon for these "breathers" to last a few weeks.

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 ot 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.