San Diego Mortgage Group

Mortgage Rates worsened at a reasonably brisk pace today when compared with recent relative stability.  Still, the movement remains confined to costs associated with as yet, unchanged Best-Execution Rates.  That means that 3.875% is still the average “best-case-scenario and best bang-for-the-buck” rate among most lenders rounded to the nearest eighth.  3.75% had been increasingly attractive last week, but has all but faded from view after lenders released rates weaker this morning.  Several lenders recalled those rates, raising costs as bond markets suffered.

Over the past few days, we’ve included the following in our analysis:

Rates are as low as they’ve ever been.  How long will
this continue?  There’s no way to know for sure, but we generally
advocate a conservative approach with rates at all time lows. 
“Conservative” in this sense simply means that history has shown us how
quickly record-low rates can disappear.  While we certainly wouldn’t
rule out the possibility that rates can improve, we’ve already been
experiencing the fact that further gains are hard-fought and take more
time than gains seen in the middle of the range. 

If you happened to read that, taken in conjunction with several days of weakness, you may be wondering if these are the days that mark the turning point away from all time low rates.  The great thing about such a concern is this: rates are still at all time lows!  If you’re worried that current weakness could mark the turning point, the sacrifice of slightly higher closing costs vs yesterday seems minimal compared to the loss of the opportunity altogether. 

If losing the opportunity doesn’t bother you much, just be sure to clearly define an acceptable level of loss from current rates.  Set yourself a “stop,” of sorts, by deciding on a rate slightly
higher than what you’re currently being quoted, at which you’d lock at a
loss if the market moves against you.  Locking in such a scenario can
prove exceedingly frustrating more often than not as the higher
probability eventuality has been for rates to return lower, but this
pales in comparison to the potential frustration of rates NOT returning
lower.

Today’s BEST-EXECUTION Rates

• 30YR FIXED -  3.875%, 3.75% as close as it’s been
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.375% / 3.25%
• 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

• Rates and costs continue to operate near all time best levels
• Current levels have experienced increasing resistance in improving much from here
• There are technical reasons for that as well as fundamental reasons
• Lenders tend to get busier when rates are in this “high 3′s” level
  and can throttle their inbound volume by raising rates or costs.
• While we don’t necessarily think rates are destined to go higher,
  given the above facts, there seems to be more risk than reward regarding
  floating
• But that will always be the case when rates
  operate near all-time levels, and as 2011 showed us, it doesn’t always
  mean they’re done improving.

…(read more)

Mortgage Rates
continue to ebb and flow in the same pattern that has persisted for over a month.  The average Best-Execution interest rate for a 30yr fixed loan has remained at 3.875% during that time and the closing costs associated withtthat rate have been gently rising and falling, with increasing regularity.  We’ve rarely strung together 3 days in a row with movements in the same direction (i.e. borrowing costs rise very slightly 3 days in a row, while Best-Ex stays at 3.875%), and the actual difference in those costs day over day continues to be fairly minimal.

Those borrowing costs rose very slightly today, a reasonable conclusion to the previous two sessions offering all time low rate/fee combinations.  This means that whereas 3.75% was “as close as it’s ever been to sharing equal recognition with 3.875% as a viable choice for Best-Execution,” that’s no longer the case today, but it should be noted that the buydown schedule (amount of additional closing costs required to move down in rate) at some lenders allows for scenarios with even lower rates to make sense depending on your preferences and qualifications.

If you didn’t catch Friday’s Article, which
went into a bit more detail on how we determine “Best-Execution,” it’s
worth a read.  But the bottom line is really this: regardless of the
actual interest rate levels, there’s no other way to say the following: rates are as low as they’ve ever been.  How long will
this continue?  There’s no way to know for sure, but we generally
advocate a conservative approach with rates at all time lows. 
“Conservative” in this sense simply means that history has shown us how
quickly record-low rates can disappear.  While we certainly wouldn’t
rule out the possibility that rates can improve, we’ve already been
experiencing the fact that further gains are hard-fought and take more
time than gains seen in the middle of the range. 

Whatever your disposition toward locking vs floating, it makes sense
to set yourself a “stop,” of sorts, by deciding on a rate slightly
higher than what you’re currently being quoted, at which you’d lock at a
loss if the market moves against you.  Locking in such a scenario can
prove exceedingly frustrating more often than not as the higher
probability eventuality has been for rates to return lower, but this
pales in comparison to the potential frustration of rates NOT returning
lower.

Today’s BEST-EXECUTION Rates

• 30YR FIXED -  3.875%, 3.75% as close as it’s been
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.375% / 3.25%
• 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

• Rates and costs continue to operate near all time best levels
• Current levels have experienced increasing resistance in improving much from here
• There are technical reasons for that as well as fundamental reasons
• Lenders tend to get busier when rates are in this “high 3′s” level
  and can throttle their inbound volume by raising rates or costs.
• While we don’t necessarily think rates are destined to go higher,
  given the above facts, there seems to be more risk than reward regarding
  floating
• But that will always be the case when rates
  operate near all-time levels, and as 2011 showed us, it doesn’t always
  mean they’re done improving.

…(read more)

After setting new records on Friday, Mortgage Rates
are absolutely flat to start the week.  That means that Best-Execution
remains most appropriately at 3.875% although 3.75% continues to be as close as it’s
ever been to getting equal recognition.  Depending on the scenario in
question, lower rates are available and in rare cases, could make
sense. 

If you didn’t catch Friday’s Article, which went into a bit more detail on how we determine “Best-Execution,” it’s worth a read.  But the bottom line is really this: regardless of the actual interest rate levels, there’s no other way to say the following: rates today and Friday are as low as they’ve ever been.  How long will this continue?  There’s no way to know for sure, but we generally advocate a conservative approach with rates at all time lows.  “Conservative” in this sense simply means that history has shown us how quickly record-low rates can disappear.  While we certainly wouldn’t rule out the possibility that rates can improve, we’ve already been experiencing the fact that further gains are hard-fought and take more time than gains seen in the middle of the range. 

Whatever your disposition toward locking vs floating, it makes sense to set yourself a “stop,” of sorts, by deciding on a rate slightly higher than what you’re currently being quoted, at which you’d lock at a loss if the market moves against you.  Locking in such a scenario can prove exceedingly frustrating more often than not as the higher probability eventuality has been for rates to return lower, but this pales in comparison to the potential frustration of rates NOT returning lower.

Today’s BEST-EXECUTION Rates

• 30YR FIXED -  3.875%, 3.75% as close as it’s been
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.375% / 3.25%
• 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

• Rates and costs continue to operate near all time best levels
• Current levels have experienced increasing resistance in improving much from here
• There are technical reasons for that as well as fundamental reasons
• Lenders tend to get busier when rates are in this “high 3′s” level
  and can throttle their inbound volume by raising rates or costs.
• While we don’t necessarily think rates are destined to go higher,
  given the above facts, there seems to be more risk than reward regarding
  floating
• But that will always be the case when rates
  operate near all-time levels, and as 2011 showed us, it doesn’t always
  mean they’re done improving.

…(read more)

How many times will we have the opportunity to write this headline in 2012?  Yet again, Mortgage Rates
on average, have broken recently set records for 30yr Fixed Best-Execution rates and moved to new all time lows.  Best-Execution remains most appropriately at 3.875% although 3.75% is as close as it’s ever been to getting equal recognition.  Depending on the scenario in question, lower rates are available and in rare cases, could make sense. 

As we note in the rate disclaimer, Best-Ex is the “most efficient combination.”  This akin to the colloquialism “most bang for your buck,” in the sense that we’re looking for the shortest amount of time to recapture any applicable borrowing costs.  In some cases, lenders won’t only NOT be charging those costs, but can actually pay a few of the other ones as well.  Either way, we look at the difference in cost between each rate.  

Until recently, that has been clearly at 3.875% with no threat of competition from lower rates, but they are gradually getting closer and closer, constituting less of a “diminishing return” to take a look at paying more in closing costs in exchange for a lower rate.  This is why we say 3.875% is still the best candidate for a Best-Execution rate, but 3.75% is getting close–because the gap in costs between 3.875% and the next few lower rates has not only narrowed, but also become more linear. 

Today set records thanks to Europe, both in terms of the broader economic landscape and specific events today.  Threats of a French credit rating downgrade by S&P flooded the Treasury complex with demand, lower the benchmark rates against which MBS (the “Mortgage-Backed-Securities” that most closely govern mortgage rates) are measured and valued.  When Treasuries rally (move lower in yield, higher in price) significantly, MBS tend to be rallying as well, though usually not as significantly.  Still, it was enough of a rally for MBS, and consequently mortgage rates, to improve.  For those that want to read about it in more detail, here’s how we described the phenomenon on the MBS Commentary.

Today’s BEST-EXECUTION Rates

• 30YR FIXED -  3.875%, 3.75% as close as it’s been
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.375% / 3.25%
• 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

• Rates and costs continue to operate near all time best levels
• Current levels have experienced increasing resistance in improving much from here
• There are technical reasons for that as well as fundamental reasons
• Lenders tend to get busier when rates are in this “high 3′s” level
  and can throttle their inbound volume by raising rates or costs.
• While we don’t necessarily think rates are destined to go higher,
  given the above facts, there seems to be more risk than reward regarding
  floating
• But that will always be the case when rates
  operate near all-time levels, and as 2011 showed us, it doesn’t always
  mean they’re done improving.

…(read more)

Mortgage Rates
held steady to slightly improved today.  This comes after yesterday marked the first hint of rate drama we’ve seen in 2012, which was nothing more than a minor increase to borrowing costs.  With each passing day of Best-Execution rates staying glued to 3.875%, we grow more and more weary of the monotony, but couldn’t be any happier. 

Yes!  Weariness and monotonous market movements have never been so exciting!  Each of those boring passing days with 3.875% rates is another day where mortgage rates have held steady at all time lows, and another day longer in this record-long streak of record-setting rates.  As has been the case, the only detectable movement continues to be seen in the form of the closing costs associated with prevailing rates.  Sure, there have been some fluctuations at individual lenders as the price of the tax cut extension works its way through the market, but on average, this is by far the longest stretch of time that best execution rates have spent under 4.0%, ever. 

At this point, the shock and awe of “rates in the high 3′s” has been replaced by the shock of how long that phenomenon persists.  Perhaps “shock” isn’t the ideal word.  Given the market backdrop, we’d expect low rates, but the extent to which they’ve held steady recently is impressive.  In the longer run, it’s possible rates could go even lower, but their recent steadiness reiterates that which we already know and have been observing: an increased resistance/difficulty in moving lower from here.

For what it’s worth, the decision to express a level of “surprise” today comes on the heels of what was the most action-packed trading day of the week.  It wasn’t much more active than yesterday, but there was more domestic economic data to be sure, and choppier trading in the bond markets of which MBS (“mortgage backed securities” that most directly govern loan pricing) are a part.  The fact that you’d never know any of this was transpiring based on lender’s rate sheets is a testament to Mortgage Rates intense predisposition to remain flat these days.

Today’s BEST-EXECUTION Rates

• 30YR FIXED -  3.875%, glimpses of 3.75% diminishing due to tax-cut-extension
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.375%
• 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

• Rates and costs continue to operate near all time best levels
• Current levels have experienced increasing resistance in improving much from here
• There are technical reasons for that as well as fundamental reasons
• Lenders tend to get busier when rates are in this “high 3′s” level
  and can throttle their inbound volume by raising rates or costs.
• While we don’t necessarily think rates are destined to go higher,
  given the above facts, there seems to be more risk than reward regarding
  floating
• But that will always be the case when rates
  operate near all-time levels, and as 2011 showed us, it doesn’t always
  mean they’re done improving.

…(read more)

Mortgage Rates finally experienced their first noticeable move higher in 2012, although it should be noted that “noticeable” doesn’t necessarily mean it was extreme.  Indeed, the 3.875% Best-Execution rate remains intact, and as has been the case for weeks, the day to day changes that we measure have been to the borrowing/closing costs associated with obtaining prevailing rates.  

Although bond markets, including MBS (the “mortgage backed securities” that most directly affect mortgage rates) are slightly weaker today (weaker: lower in price, higher in yield/rate), the ongoing effects of the tax cut extension are having an impact on the averages that we collate each day, as some lenders have had rather precipitous increases to fees well beyond what would be justified simply by movements in MBS.

Like yesterday, today was fairly quiet in terms of market movements.  It’s just that the movement wasn’t in our favor.  There were economic releases this morning, but none of them were responsible for the weakness in rates markets.  In fact, assigning responsibility is a bit challenging due to the unseen forces of corporate debt issuance and tradeflow considerations surrounding this week’s Treasury auction cycle.  That’s all just a fancy way of saying traders were trading based more on their position goals as opposed to economic events or news headlines. 

As we anticipated yesterday, volume increased today and stands a reasonable chance of doing the same tomorrow.   With no major AM data, the focal point for MBS Tomorrow’s should be tomorrow’s 10yr Treasury Auction–a much more relevant benchmark for MBS (in other words, if the auction goes very well or very poorly for 10yr Treasuries, MBS, and thus mortgage rates could be impacted as well).

Today’s BEST-EXECUTION Rates

• 30YR FIXED -  3.875%, glimpses of 3.75% diminishing due to tax-cut-extension
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.375%
• 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

• Rates and costs continue to operate near all time best levels
• Current levels have experienced increasing resistance in improving much from here
• There are technical reasons for that as well as fundamental reasons
• Lenders tend to get busier when rates are in this “high 3′s” level
  and can throttle their inbound volume by raising rates or costs.
• While we don’t necessarily think rates are destined to go higher,
  given the above facts, there seems to be more risk than reward regarding
  floating
• But that will always be the case when rates
  operate near all-time levels, and as 2011 showed us, it doesn’t always
  mean they’re done improving.

…(read more)