Archive for the ‘Mortgage Rate Watch’ Category

After finally managing to topple "The Wall", the mortgage rate rally stalled and went sideways last week.

We'd describe this pause as mortgage rates taking a "breather" in the wake of a 2-month rally. The sideways shuffle seen last week serves as a reminder of the threats faced by home loan borrowers when floating a loan on a short-term timeline. The market doesn't always act the way you'd expect it to and rallies don't last forever. Investors always end up finding a way to question positive progress, and that generally leads to an unfriendly directional reaction.

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%. Aggressive 4.375% quotes are still being reported but will  involve 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. 

THE WEEK AHEAD: The week ahead offers key data on second-quarter industrial production, retail sales, inflation, the housing market, consumer sentiment, and manufacturing. It also presents an opportunity to question the positive progress we've made over the past two-months. As illustrated by the sideways behavior of mortgage rates last week, bond investors are already acting nervous about the end of the Federal Reserve's "Quantitative Easing" program (just a few weeks away now). Adding anxious sentiment is the potential for the U.S. to briefly default on its debt if Congress fails to raise the debt ceiling. From that perspective we feel it's going to take another round of poor economic data this week to confirm our longer-term bullish mortgage rates bias.

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....

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.

After tearing down "The Wall" last Friday, the mortgage rate rally stalled and went sideways this week.

We'd describe this pause as mortgage rates taking a "breather" in the wake of a 2-month rally.  If you're looking for a deeper explanation, read THIS POST on "auction concessions". The sideways shuffle seen over the past five days serves as a reminder of the threats faced by home loan borrowers when floating a loan on a short-term timeline. The market doesn't always act the way you'd expect it to and rallies don't last forever, investors always end up finding a way to question positive progress, and that generally leads to an unfriendly directional reaction.

Sideways mortgage rate behavior followed by an abrupt drop followed by another spell of mostly sideways movement is apparent in the updated chart of Consumer Rate Quotes below. If the line is moving up, origination costs are rising.  If the line is moving lower, costs are getting cheaper. The rapid decline in costs which occurred last Wednesday was the second stage of "The Wall" coming down. Last Friday "The Wall" completely crumbled. And then Consumer Rate Quotes barely budged this week. Still, mortgage rates haven't been this aggressive since 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%. Aggressive 4.375% quotes are still being reported but will  involve 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. 

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 to be expected along the way.  That means borrowers working on a shorter lock/float timeline should remain defensive. That point was proven this week. Your main goal is to protect new, lower rate quotes from short-term market fluctuations.  The overall bullish trend is still very much in tact though.  Intermediate to longer-term scenarios are more than justified in floating.

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.

After tearing down "The Wall" last Friday, the mortgage rate rally stalled and went sideways this week.

We'd describe this pause as mortgage rates taking a "breather" in the wake of a 2-month rally.  If you're looking for a deeper explanation, read THIS POST on "auction concessions". The sideways shuffle seen over the past five days serves as a reminder of the threats faced by home loan borrowers when floating a loan on a short-term timeline. The market doesn't always act the way you'd expect it to and rallies don't last forever. Investors always end up finding a way to question positive progress, and that generally leads to an unfriendly directional reaction.

Sideways mortgage rate behavior followed by an abrupt drop followed by another spell of mostly sideways movement is apparent in the updated chart of Consumer Rate Quotes below. If the line is moving up, origination costs are rising.  If the line is moving lower, costs are getting cheaper. The rapid decline in costs which occurred last Wednesday was the second stage of "The Wall" coming down. Last Friday "The Wall" completely crumbled. And then Consumer Rate Quotes barely budged this week. Still, mortgage rates haven't been this aggressive since 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%. Aggressive 4.375% quotes are still being reported but will  involve 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. 

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 to be expected along the way.  That means borrowers working on a shorter lock/float timeline should remain defensive. That point was proven this week. Your main goal is to protect new, lower rate quotes from short-term market fluctuations.  The overall bullish trend is still very much in tact though.  Intermediate to longer-term scenarios are more than justified in floating.

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.

After taking a breather early in the week, home loan borrowing costs resumed their rally yesterday. With those loan pricing improvements, conventional 30-year fixed mortgage rates were teetering on another shift lower in  "Best Execution"....

That didn't happen today. In fact, the exact opposite happened. All of yesterday's improvements were erased, leaving loan pricing essentially unchanged over the last three days. This serves as a reminder of the threats home loan borrowers face when floating a loan on a short-term timeline.

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%. Aggressive 4.375% quotes are still being reported but will  involve 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. 

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 to be expected along the way.  That means borrowers working on a shorter lock/float timeline should remain defensive. Your main goal is to protect new, lower rate quotes from short-term market fluctuations.  The overall bullish trend is still very much in tact though.  Intermediate to longer-term scenarios are more than justified in floating.

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.

After taking a brief breather early in the week, home loan borrowing costs have resumed their rally. With today's loan pricing improvements, conventional 30-year fixed mortgage rates are teetering on another shift lower in  "Best Execution".

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%. Aggressive 4.375% quotes have been reported but may involve 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. 

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 to be expected along the way.  That means borrowers working on a shorter lock/float timeline should remain defensive. Your main goal is to protect new, lower rate quotes from short-term market fluctuations.  The overall bullish trend is still very much in tact though.  Intermediate to longer-term scenarios are more than justified in floating.

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.

Mortgage rate watchers were reminded once again today of the threats they face when floating a loan on a shortened timeline.

Although consumer rate quotes were able to recover from early morning weakness, just like they did yesterday,  home loan borrowing costs have failed to make positive progress since "The Wall" came crashing down last Friday. The positive big picture tone in the bond market has been put on pause. We believe this stubborn behavior is factor of "debt auction concessions".

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%.  In some cases, 4.375% can make sense, but will involve 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 to be expected along the way.  That means borrowers working on a shorter lock/float timeline should remain defensive. Your main goal is to protect new, lower rate quotes from short-term market fluctuations. This guidance has already proven accurate as borrowing costs rose slightly today, driven by a "pre-auction price concession" ahead of tomorrow's 3-year debt auction.   Although loan pricing did in fact deteriorate, the overall bullish trend is still very much in tact.  Intermediate to longer-term scenarios are more than justified in floating. READ MORE:  What's an auction concession?

CURRENT 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 to be expected along the way.  That means borrowers working on a shorter lock/float timeline should remain defensive. Your main goal is to protect new, lower rate quotes from short-term market fluctuations.  The overall bullish trend is still very much in tact though.  Intermediate to longer-term scenarios are more than justified in floating. READ MORE: The Day Ahead

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.

"The Wall" was seen wavering last Wednesday, teetering in its most precarious position this year. But we needed more proof that it was ready to be toppled before declaring it had been torn down.  That confirmation was granted by an unexpectedly weak Employment Situation Report on Friday.  This data validated fears that the economy is not recovering at the pace previously thought. As a result, "The Wall" has fallen, paving a path for a potentially significant shift lower in home loan borrowing costs as we head into the summer months. FULL REPORT RECAP

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%.  In some cases, 4.375% can make sense, but will involve 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. 

THE WEEK AHEAD: If deteriorating investor sentiment turns a corner this week, it's unlikely to be a function of new optimism found in economic data. The calendar of events is simply too light to drive a sustainable directional reversal in the stock market, which would be a catalyst for higher mortgage rates. While the schedule in the week ahead includes several speakers from the Federal Reserve and an anecdotal review of economic developments, the main driver of home loan borrowing costs will likely be debt auctions. The Treasury Department is set to sell $66 billion in 3-year, 10-year and 30-year debt on Tuesday, Wednesday, and Thursday.  

READ MORE: MND's ECONOMIC EVENTS CALENDAR

CURRENT 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 to be expected along the way.  That means borrowers working on a shorter lock/float timeline should remain defensive. Your main goal is to protect new, lower rate quotes from short-term market fluctuations. This guidance has already proven accurate as borrowing costs rose slightly today, driven by a "pre-auction price concession" ahead of tomorrow's 3-year debt auction.   Although loan pricing did in fact deteriorate, the overall bullish trend is still very much in tact.  Intermediate to longer-term scenarios are more than justified in floating. READ MORE:  What's an auction concession?

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.

On Wednesday we witnessed the second stage of a potentially significant shift lower in home loan borrowing costs. "The Wall"  was wavering,  teetering in its most precarious position this year, but we needed more proof that it was ready to be toppled.  That confirmation could only be granted by today's high-risk event: The Employment Situation Report. We needed to reinforce the rally with a weak jobs report. And that's exactly what we got.....

Job growth in May was much weaker than expected. The April and March reports were both revised for the worse. The unemployment rate rose to 9.1%. And the number of people who've been jobless for longer than 27 weeks increased by 361,000 to 6.2 million, which equates to 45.1% of unemployed Americans.  That said, it's easy to see why economists are slashing their 1st and 2nd quarter economic growth projections. We needed to see at least 200,000 jobs created every month just to reach 3.00% GDP projections, five months into 2011 the economy is only averaging 156,600 jobs per month. FULL RECAP INCLUDING BRIGHT SPOTS

This data validates fears that the economy is not recovering at the pace previously thought. The bond market's reaction to this realization didn't exactly reflect that sentiment, instead it seemed like bonds were experiencing rally exhaustion, but the underlying tone remains highly-supportive of a sustained rally. Enough so to say: TEAR DOWN THIS WALL!!!

Sideways mortgage rate behavior followed by two abrupt drops is apparent in the updated chart of Consumer Rate Quotes below. If the line is moving up, origination costs are rising for that particular note rate offer.  If the line is moving lower, costs are getting cheaper.  The rapid decline in costs which occurred on Wednesday was the second stage of "The Wall" coming down. Today "The Wall" completely crumbled. (We make that proclamation based on weak jobs data and the hedging strategies of lenders).

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%.  In some cases, 4.375% can make sense, but will involve increased closing costs in the form of an origination fee.  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: It might seem like it's time to consider "The Wall" as being completely destroyed at this point. Yes, "The Wall" is indeed teetering in its most precarious position this year.  Borrowing costs are certainly low enough to justify that, but the most important confirmation can only be granted by tomorrow's high-risk event: The Employment Situation Report.  If that data confirms the slower than expected economic recovery message that has fueled the two-month bond market rally, new improvements will be much less tenuous.  We'd remain defensive even as rates progress lower, preferring the "sure thing" of the best rates of the year today versus the risk of losing them tomorrow.  That assumes either that your time frame is limited or that rates won't recover from any set-backs on the horizon.  Longer term and more flexible scenarios are still justified in floating.

CURRENT GUIDANCE:  With "The Wall" now torn down a path has been paved for mortgage rates to continue improving. An extended rally will not come without setbacks though. Short-term corrections are to be expected along the way.  That means borrowers who are working on a shorter lock/float timeline should remain defensive. Your main goal is to protect new, lower rate quotes from short-term market fluctuations,which could happen as early as Monday and last all week. The overall bullish trend is very much in tact though. Intermediate to longer-term scenarios are more than justified in floating.

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.

On Wednesday we witnessed the second stage of a potentially significant shift lower in home loan borrowing costs. "The Wall"  was wavering,  teetering in its most precarious position this year, but we needed more proof that it was ready to be toppled.  That confirmation could only be granted by today's high-risk event: The Employment Situation Report. We needed to reinforce the rally with a weak jobs report. And that's exactly what we got.....

Job growth in May was much weaker than expected. The April and March reports were both revised for the worse. The unemployment rate rose to 9.1%. And the number of people who've been jobless for longer than 27 weeks increased by 361,000 to 6.2 million, which equates to 45.1% of unemployed Americans.  That said, it's easy to see why economists are slashing their 1st and 2nd quarter economic growth projections. We needed to see at least 200,000 jobs created every month just to reach 3.00% GDP projections, five months into 2011 the economy is only averaging 156,600 jobs per month. FULL RECAP INCLUDING BRIGHT SPOTS

This data validates fears that the economy is not recovering at the pace previously thought. The bond market's reaction to this realization didn't exactly reflect that sentiment, instead it seemed like bonds were experiencing rally exhaustion, but the underlying tone remains highly-supportive of a sustained rally. Enough so to say: TEAR DOWN THIS WALL!!!

Sideways mortgage rate behavior followed by two abrupt drops is apparent in the updated chart of Consumer Rate Quotes below. If the line is moving up, origination costs are rising for that particular note rate offer.  If the line is moving lower, costs are getting cheaper.  The rapid decline in costs which occurred on Wednesday was the second stage of "The Wall" coming down. Today "The Wall" completely crumbled. (We make that proclamation based on weak jobs data and the hedging strategies of lenders).

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%.  In some cases, 4.375% can make sense, but will involve increased closing costs in the form of an origination fee.  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: It might seem like it's time to consider "The Wall" as being completely destroyed at this point. Yes, "The Wall" is indeed teetering in its most precarious position this year.  Borrowing costs are certainly low enough to justify that, but the most important confirmation can only be granted by tomorrow's high-risk event: The Employment Situation Report.  If that data confirms the slower than expected economic recovery message that has fueled the two-month bond market rally, new improvements will be much less tenuous.  We'd remain defensive even as rates progress lower, preferring the "sure thing" of the best rates of the year today versus the risk of losing them tomorrow.  That assumes either that your time frame is limited or that rates won't recover from any set-backs on the horizon.  Longer term and more flexible scenarios are still justified in floating.

CURRENT GUIDANCE:  With "The Wall" now torn down a path has been paved for mortgage rates to continue improving. An extended rally will not come without setbacks though. Short-term corrections are to be expected along the way.  That means borrowers who are working on a shorter lock/float timeline should remain defensive. Your main goal is to protect new, lower rate quotes from short-term market fluctuations,which could happen as early as Monday and last all week. The overall bullish trend is very much in tact though. Intermediate to longer-term scenarios are more than justified in floating.

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.

Yesterday we witnessed the second stage of a potentially significant shift lower in home loan borrowing costs. While these developments were encouraging, short-term reversals remained a constant threat. Today we were reminded of those short-term threats as investors took interest rate profits ahead of tomorrow's "high-risk" event: The Employment Situation Report. As a result bond prices fell and benchmark interest rates rose, pushing consumer borrowing costs marginally higher. Fortunately loan pricing didn't deteriorate enough to warrant a shift higher in Best Execution mortgage rate quotes, we continue to hover near 6-month lows.

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%.  In some cases, 4.375% can make sense, but will involve increased closing costs in the form of an origination fee.  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:  The tone has been generally positive for mortgage rates since April 11^th.  We continue to entertain that it could generally stay that way for even longer, clearly justifying longer term floating strategies.  However, further positive progress can be slow and short term corrections are to be expected.  That means borrowers who are working on a shorter lock/float timeline should remain defensive of new, lower "Best Execution" Mortgage Rate quotes. Your main goal is to protect a lower rate offer from short-term market fluctuations, especially with the high risk event on the horizon in the form of this Friday's Employment Situation Report.  This is the sort of report than can either confirm the recent break lower in borrowing costs, or send them right back to other side of the fence.

CURRENT GUIDANCE: It might seem like it's time to consider "The Wall" as being completely destroyed at this point. Yes, "The Wall" is indeed teetering in its most precarious position this year.  Borrowing costs are certainly low enough to justify that, but the most important confirmation can only be granted by tomorrow's high-risk event: The Employment Situation Report.  If that data confirms the slower than expected economic recovery message that has fueled the two-month bond market rally, new improvements will be much less tenuous.  We'd remain defensive even as rates progress lower, preferring the "sure thing" of the best rates of the year today versus the risk of losing them tomorrow.  That assumes either that your time frame is limited or that rates won't recover from any set-backs on the horizon.  Longer term and more flexible scenarios are still justified in floating.

 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.