San Diego Mortgage Group

Mortgages rates are unchanged to slightly higher today.  The change is so minimal that for all intents and purposes, you might as well consider rates “unchanged.”  This is a rather remarkable accomplishment considering tomorrow’s Jobs report because it means that, on average, rates have held their narrowest range between any two Jobs reports since we started keeping track.  Despite that flatness, Best-Execution rates for 30yr Fixed Conventional loans eased down from 4.0% to 3.875% during that time, and that’s where we sit again today.  This is also the lowest stable Best-Execution rate we’ve recorded (read more about Best-Execution calculations). 

It feels like we’ve harped on the high-risk nature of tomorrow’s Jobs report (NFP) ad nauseam.  You can see the various iterations of that harping in commentary from yesterday and beyond, but the key points are these:

• NFP is not a guarantee of big movement, but as far as economic events go, it has as much potential to move rates markets as anything.
• Rates have been at all-time lows in terms of Best-Execution and the costs for those rates have been near all-time lows.
• Rates have approached and bounced higher from current levels several times now without breaking lower.
• Tomorrow’s report could cause rates to improve if the report is weak, but probably not as fast as a strong report could cause rates to deteriorate.

Alan Craft, Loan Officer at Integrity Home Loan of Central Florida: I always approach NFP with an extra degree of caution.  At some point a number is going to come in that will have a significant impact on rates.  It may be this week, it may be later in the year. Noone knows when. Either way I advise my clients to lock pre NFP if closing within 30 days.

Thomas Quann, Stonegate Mortgage Associates, Inc:  In my opinion, we are talking about rates that are at 60 year lows.  I think the benefit of floating is outweighed by the benefit of obtaining a rate in the 3′s, lock in your savings now!  I guess the best way to put it is it worth loosing a $300 per month savings if rates were to go higher to improve the savings to $315 per month?  My answer is NO,lock in now if you can!

Bob Van Gilder, Broker – Finance One Mortgage:  Tomorrow’s NFP number has the potential to move rates. But, c’mon, if you are locked don’t worry about it. If rates move down an eighth you save  8 cents per thousand borrowed. If you like what you are being quoted- lock it. Locking is the easiest part of the process.

Andy Pada at 1st 2nd Mortgage Co:  Tomorrow is a high risk day with no commensurate high reward.  Period.  Lock in.

Ted Rood, Senior Mortgage Consultant at Wintrust Bank:  Tomorrow’s NFP already has diminished expectations due to the (frequently incorrect) ADP survey released Wednesday, but that being said, the market mover these days is Europe and their crisis d’jour.  The US economy is “less bad,” and thus gets a lot of attention by default.  While I am personally inclined to lock (to avoid redisclosing and for client peace of mind), I do not anticipate tomorrow’s release will significantly change rates regardless of the #.  The benefit to floating is the ability to eventually lock for 15 or 30 days (with better pricing), compared with longer periods earlier in the loan process.  If you have decent risk tolerance, you can benefit even if rates stay flat just by locking for a shorter period of time. 

Mike Owens, HorizonFinancial, Inc:  This has been repeated many times I am sure, but  ” would you rather lock and rates go down or not lock and rates go up”.   

Today’s BEST-EXECUTION Rates 

• 30YR FIXED -  3.875%
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.125-3.25%
• 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
• Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally 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.
• (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

…(read more)

Mortgages rates are unchanged to slightly lower today, after shying away from multi-month lows yesterday.  A weaker than expected employment report helped underlying rates markets start the day off in good territory, but further progress was elusive.  The net effect was insufficient to cause any mid-day reprices and left lenders’ offerings in only marginally better territory on average, with no change to the prevailing 3.875% Best-Execution rate for Conventional 30yr Fixed loans. (read more about Best-Execution calculations). 

At this point, rates are basically bouncing along the bottom of their all time range.  They might not be absolutely as low as some of the very best moments of the last 6 months, but we’re talking about very small fluctuations in closing costs while rates themselves are unaffected. That means that the actual interest rate you’re quoted should be the same over the past few days (weeks even!) with the changes being seen in the borrowing costs, or the amount of lender credit depending on your scenario.

“With rates at all time lows I have been advising clients to lock the loan if they like the rate they are quoted,” says Jason Zimmer, president of Parlay Mortgage and Property.  ”I see very little upside to floating and I have been giving this advice for the last several months.  The only exception is for people with new construction purchases or any purchase over 60 days away.”

Zimmer is in good company.  With the high-risk event of Friday’s mighty Employment Situation Report (also referred to as NFP for the report’s headline “Non-Farm-Payrolls” figure) on the horizon, combined with the historical tendency for rates to have a tough time making any progress into lower territory, there’s a good case to be made for locking right now.  

Matt Hodges at Presidential Mortgage Group agrees.  ”Over the past couple of days, locking has been the preferred recommendation to borrowers.  The obvious concern regarding Friday’s NFP is that borrowers will face higher costs if the report surprises to the upside.  Less obvious is the possibility that even a weak report might not motivate rates much lower,” explains Hodges.  ”Normally, weak economic data is good for rates, but at current levels, Lenders are increasingly concerned with volatility, re-negotiations, and blown lock commitments.  That makes any further progress slow-going, and in my view, generally not worth the risk.”

This is very much in the same vein as yesterday’s comments on the upcoming risky events:  

We have two ingredients.  First, there’s the fact that historical examples of the Jobs report coming up on Friday have been among the biggest potential market movers on any given month.  There are plenty of times where this DOES NOT turn out to be the case, but if you lined up all the various pieces of scheduled data each month next to their corresponding market movements over time, The Employment Situation report would be at the top along with FOMC Announcements.  

Second, there’s the fact that lenders’ rate sheet offerings haven’t been much lower than they are currently.  Now…  ”much lower” is subjective, of course.  The few hundred dollars in closing cost difference could mean different things to different people. Additionally, certain scenarios that are on “the edge” between two different interest rates (say 4.0% and 3.875%) could actually move down in rate within the confines of the “not much” generality above.  But on average, Best-Execution rates for 30yr Conventional loans have been CLOSE to edging down to 3.75, but have never done so on a widespread basis or for more than a day.  

“The bottom line is that we can’t know exactly what lies ahead with Friday’s data.  It could take markets either way.  What we do know is that there’s limited incentive to float at current levels,” explains Victor Burek of Benchmark Mortgage.  ”Historically, mortgage rates have more room to move higher than to move lower. As the saying goes, its always better to lock when you should have floated, then to float when you should have locked.”

Today’s BEST-EXECUTION Rates 

• 30YR FIXED -  3.875%
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.125-3.25%
• 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
• Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally 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.
• (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

…(read more)

Mortgages Rates are moderately improved to begin the week, taking them slightly lower than than April’s best two days (4/10 and 4/23) and as close as they’ve been to all-time lows in several months. This further solidifies the Conventional 30yr Fixed Best-Execution Rate at 3.875%, which had recently shared the stage with 4.0%.

Keep in mind that “best-execution” as we calculate it, connotes the no-closing-cost rate for the best-qualified borrowers in the most ideal scenario.  (read more about Best-Execution calculations).  If your scenario is something less than flawless, and you were looking at a 4.0% rate on Friday, there’s a chance that 3.875% will be doable today.  That said, 3.875% today is still a more expensive rate than 4.0% was on Friday any way you slice it.  In other words, 3.875% is still going to require more closing costs (or less lender-credit toward closing costs) than 4.0% did on Friday. 

Despite the improvements in rate sheets today, the broader markets were strikingly flat yet again.  Lots of market participants are out of the office this week for various holidays in Europe and Asia.  Believe it or not, such things do, in fact, have an effect on how busy our domestic trading sessions can be.

We’d expect the level of market activity to pick up as the week progresses, but certainly Friday is the most important day.  Whereas we might see some small movement in either direction throughout the week, things can change abruptly on Friday with the release of The Employment Situation Report.  The fact that rates have been so low and so stable is a negative risk in our view.

 Historically, there’s been limited benefit in floating at current levels, and historically, “big news” that follows “flat markets” creates the potential for huge swings.  This is not at all to say that rates couldn’t or wouldn’t improved if the Jobs report was very weak, simply that there’s no historical precedent to them improving much beyond current levels and that the Jobs report creates the potential for volatility.  

Today’s BEST-EXECUTION Rates 

• 30YR FIXED -  3.875%
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.125-3.25%
• 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
• Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally 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.
• (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

…(read more)

Just before reaching fresh multi-month lows, Mortgages Rates rose slightly today after a stronger than expected read on the manufacturing sector.  Overall, rates continue to operate at the same “best-execution” level of 3.875% and today’s deterioration would instead be seen in the form of slightly higher borrowing costs (or decreased lender credit toward closing costs, depending on your scenario). 

Keep in mind that “best-execution” as we calculate it, connotes the no-closing-cost rate for the best-qualified borrowers in the most ideal scenario.  (read more about Best-Execution calculations).  For many scenarios, 4.0% continues to constitute a good bang for the buck.  

Whatever the case, take a look at the the rate and fee structure of adjacent rates.  In other words, you may find that paying more up front for a lower rate makes more sense for you due to payment savings.  Conversely, maybe you’d rather spend less out of pocket in exchange for a slightly higher payment.  

Moving on to markets and movement now…  Yesterday we said that we’d expect the level of market activity to pick up as the week progresses, and indeed that was the case after this morning’s ISM Manufacturing report came in stronger-than-expected.  Economic data has been sort of lackluster recently, and yesterday’s data had markets fearing another weak report this morning.  So when it surprised to the upside, stocks rallied significantly and interest rates on fixed-income investments generally rose.  The MBS (“mortgage backed securities”) that most directly influence mortgage rates are part of that fixed-income sector.  

Yesterday’s stance is actually still the best way to think about the rest of the week for now, and may continue to be, barring any dramatic surprises in data or headlines.  Particularly:

Whereas we might see some small movement in either direction throughout the week, things can change abruptly on Friday with the release of The Employment Situation Report.  The fact that rates have been so low and so stable is a negative risk in our view.  Historically, there’s been limited benefit in floating at current levels, and historically, “big news” that follows “flat markets” creates the potential for huge swings.  This is not at all to say that rates couldn’t or wouldn’t improved if the Jobs report was very weak, simply that there’s no historical precedent to them improving much beyond current levels and that the Jobs report creates the potential for volatility.  

In other words, we have two ingredients.  First, there’s the fact that historical examples of the Jobs report coming up on Friday have been among the biggest potential market movers on any given month.  There are plenty of times where this DOES NOT turn out to be the case, but if you lined up all the various pieces of scheduled data each month next to their corresponding market movements over time, The Employment Situation report would be at the top along with FOMC Announcements.  

Second, there’s the fact that lenders’ rate sheet offerings haven’t been much lower than they are currently.  Now…  ”much lower” is subjective, of course.  The few hundred dollars in closing cost difference could mean different things to different people.  Additionally, certain scenarios that are on “the edge” between two different interest rates (say 4.0% and 3.875%) could actually move down in rate within the confines of the “not much” generality above.  But on average, Best-Execution rates for 30yr Conventional loans have been CLOSE to edging down to 3.75, but have never done so on a widespread basis or for more than a day.  

Today’s BEST-EXECUTION Rates 

• 30YR FIXED -  3.875%
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.125-3.25%
• 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
• Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally 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.
• (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

…(read more)

Mortgages Rates are unchanged from yesterday, capping an extremely flat and historically low week.  The FOMC events on Wednesday gave lenders some pause as they were generally more conservative with pricing.  Even so, the variations left the entire week’s range about as narrow as they come, a feat that’s even more striking considering nearness to all time lows.

The Conventional 30yr Fixed Best-Execution Rate remains at 3.875% after recently being stuck between there and 4.0%. Keep in mind that “best-execution” as we calculate it, connotes the no-closing-cost rate for the best-qualified borrowers in the most ideal scenario.  (read more about Best-Execution calculations)

Low, stable rates are a great thing for the mortgage market, but the longer this narrow, sideways range persists, the greater the risk of bigger movements when the range finally breaks.  Although “greater risks” can refer to both negative AND positive outcomes, we’d continue to note that rates in general have had a hard time going much lower than current levels.  

In other words, historically, there have been diminishing returns for floating vs locking when rates are this low.  That’s not to say that this scenario couldn’t change in the future, merely that it hasn’t so far.  One of the phrases we’ve used with some frequency with our MBS crowd is “play the range until the range plays you.”  In other words, when the market has shown a predisposition to bounce back and forth within the range, take actions based on the expectation that it will continue but be prepared to change your strategy when the range is broken.  

It’s sort of a “don’t sweat the small stuff” mentality, and admittedly, it has only limited implications on isolated decisions, such as the decision to lock one’s own personal loan.  To that end, we can’t offer much more advice beyond the usual “tough time going much lower than this historically.”  As far as keeping an eye on threats to “the range,” we’ve had our eye on next week’s Employment Situation Report for quite some time.  Things could begin changing even in the first four days of the week, but Friday is the biggest potential market mover in the week ahead.

Today’s BEST-EXECUTION Rates 

• 30YR FIXED -  3.875%
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.125-3.25%
• 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
• Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally 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.
• (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

…(read more)

Mortgages Rates are unchanged from yesterday, capping an extremely flat and historically low week.  The FOMC events on Wednesday gave lenders some pause as they were generally more conservative with pricing.  Even so, the variations left the entire week’s range about as narrow as they come, a feat that’s even more striking considering nearness to all time lows.

The Conventional 30yr Fixed Best-Execution Rate remains at 3.875% after recently being stuck between there and 4.0%. Keep in mind that “best-execution” as we calculate it, connotes the no-closing-cost rate for the best-qualified borrowers in the most ideal scenario.  (read more about Best-Execution calculations)

Low, stable rates are a great thing for the mortgage market, but the longer this narrow, sideways range persists, the greater the risk of bigger movements when the range finally breaks.  Although “greater risks” can refer to both negative AND positive outcomes, we’d continue to note that rates in general have had a hard time going much lower than current levels.  

In other words, historically, there have been diminishing returns for floating vs locking when rates are this low.  That’s not to say that this scenario couldn’t change in the future, merely that it hasn’t so far.  One of the phrases we’ve used with some frequency with our MBS crowd is “play the range until the range plays you.”  In other words, when the market has shown a predisposition to bounce back and forth within the range, take actions based on the expectation that it will continue but be prepared to change your strategy when the range is broken.  

It’s sort of a “don’t sweat the small stuff” mentality, and admittedly, it has only limited implications on isolated decisions, such as the decision to lock one’s own personal loan.  To that end, we can’t offer much more advice beyond the usual “tough time going much lower than this historically.”  As far as keeping an eye on threats to “the range,” we’ve had our eye on next week’s Employment Situation Report for quite some time.  Things could begin changing even in the first four days of the week, but Friday is the biggest potential market mover in the week ahead.

Today’s BEST-EXECUTION Rates 

• 30YR FIXED -  3.875%
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.125-3.25%
• 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
• Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally 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.
• (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

…(read more)

Mortgages Rates are back down to Tuesday’s levels, near the lowest in several months.  Yesterday’s FOMC-related events caused lenders to price rate sheets somewhat conservatively before the actual information was released.  Since then, markets have calmed and the bond markets that affect mortgage rates–namely MBS (“Mortgage-Backed-Securities”) are slightly improved.  

That improvement basically solidifies 3.875% as the current Best-Execution Rate for 30yr Fixed Conventional loans (read more about Best-Execution calculations).  Although this isn’t true for all lenders, on average, rates are very close to being as low as they’ve been since February. 

Yesterday, we referred to the FOMC-related events (Announcement, Member Forecasts, and Bernanke Press Conference) as a collective “dud,” and noted that the uneventful passing of those events put more focus on the economic data in the near future.  We got a good example of that this morning when a weaker-than-expected Jobless Claims report helped bond markets solidify and improve upon their overnight gains.

That said, there is even more meaningful data in the near future.  Most immediate is tomorrow morning’s first look at Q1 GDP.  That definitely has market moving potential, but the biggest report in the near future arrive next Friday with the Employment Situation Report.  When considering that the upcoming economic data has the potential to take rates in either direction, we’d note that rates in general have had a hard time going much lower than current levels.  

In other words, historically, there have been diminishing returns for floating vs locking when rates are this low.  That’s not to say that this scenario couldn’t change in the future, merely that it hasn’t so far. 

Today’s BEST-EXECUTION Rates 

• 30YR FIXED -  3.875%
• FHA/VA -3.75%
• 15 YEAR FIXED -  3.125-3.25%
• 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
• Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally 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.
• (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

…(read more)