San Diego Mortgage Group

Mortgages Rates are unchanged in some cases and slightly higher in others.  Overall, the difference between today’s offerings and yesterday’s is fairly minimal and is more likely to be seen in the form of slightly higher closing costs (or lower lender credit) as opposed to the interest rates themselves.  Yesterday we noted that more an more lenders are able to offer 3.875% as a “Best Execution” rate for Conventional 30yr Fixed Loans.  Best-Ex is currently shared by 3.875% and 4.0%.

(read more about Best-Execution calculations).

Although there was plenty of economic data for markets to digest today, it did little to move interest rates in one direction or another.  Granted, rates are slightly higher, but because of yesterday’s moderate improvements, they’re still in healthy territory.  In short, market movements didn’t really “make a statement” about interest rates’ determination to go higher or lower.

We’ve been expecting recent monotony to be broken by tomorrow’s FOMC Announcement, or at least to see its best potential of being broken.  The FOMC Announcement is the Fed’s periodic official statement on monetary policy.  It used to be that markets tuned in to find out if there would be a change in the policy itself, usually meaning a change in the Fed Funds Rate.

But not only are markets not remotely close to expecting a change in Fed rates, they’re not expecting any changes in policy either.  As has been the case on several occasions recently, markets are most interest in the verbiage the Fed chooses to convey its existing policy.  That verbiage can provide hints about how or when the Fed’s stance might be changing.

The bottom line is that tomorrow’s events can have a large, immediate effect on mortgage rates, though we’d be careful to note that there are plenty of examples of FOMC Announcement days that have resulted in relatively unchanged mortgage rates the following day.  The point is that FOMC Announcements–particularly those like this week’s which is accompanied by a Bernanke Press Conference and FOMC Forecast updates–carry just about as much POTENTIAL to move markets as anything.  

Today’s BEST-EXECUTION Rates 

• 30YR FIXED -  3.875%-4.0%
• 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 higher today, following the FOMC Announcement, Member Forecasts and Press Conference.  The actual text of the Fed’s announcement and the actual levels of it’s future forecasts did not cause the move higher in rates.  Rather, weaker market levels in the morning combined with the fact that those FOMC-related events held the potential to cause volatility caused initial rate sheets this morning to be a bit weaker than they otherwise would have been due to market levels alone.

In other words, markets + fear of volatility surrounding FOMC = higher rates today.  Although there was a ton of volatility today, it ended up being a well balanced fight, and didn’t allow interest rates to run too far in one direction or another.  The net effect is a Best-Execution Rate for 30yr Fixed Conventional loans that should be the same as yesterday’s for most scenarios.  The deterioration is more likely to be seen in the form of higher closing costs or lower lender credit depending on your scenario.

(read more about Best-Execution calculations).

Yesterday we said that the FOMC-related events could have a “large, immediate effect on mortgage rates, though we’d be careful to note that there are plenty of examples of FOMC Announcement days that have resulted in relatively unchanged mortgage rates the following day.”  Today was the latter–a “dud” if you will.  This puts more focus on the economic data in the near future including this Friday’s GDP and next Friday’s even more important Employment Situation Report.  

In one sense, it’s always encouraging to see markets stay relatively stable in situations where they have historically been volatile.  That can help ease concerns about low rates vanishing in an instant.  But we’re also faced with the reality that interest rates CONTINUE to have a hard time getting much lower from current levels.

Today’s BEST-EXECUTION Rates 

• 30YR FIXED -  3.875%-4.0%
• 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 to their lowest levels since February.  For an increasing number of lenders, current rates begin to shift the balance towards 3.875% as being the only Best-Execution Rate for Conventional 30yr Fixed Loans.  Best-Ex is currently shared by 3.875% and 4.0%.

In many cases, the actual interest rate quoted by lenders will be the same today as it was last week, with the improvements seen in the form of lower closing costs (or increased lender credit toward closing costs as the case may be).  That said, today’s combinations of rate and payment is the best it’s been since mid to late February for many lenders, though remains very close to rate sheets from April 10th.

The dominant theme in our commentary over the past few weeks was the equivocal movement of rates and markets ahead of the current week’s events.  We’ve seen very few weeks where interest rates have moved in such a narrow range for an entire week.  Even without a big market mover on the horizon, that sort of behavior tends to suggest things will move in one direction or another.

But of course there is a big potential market mover on the horizon, and it’s coming right up!  On Wednesday, the Fed releases another periodic policy announcement (“FOMC Announcement” officially).  While markets haven’t been expecting any change in the Fed’s lending rates for quite some time, these are the single most important economic events as far as the world of interest rates is concerned.  

Market participants still aren’t even remotely expecting a change in policy to be announced, but they will be listening closely to see if there’s any evolution in “the way the Fed communicates existing policy.”  If market picks up hints that the Fed could be shifting in one direction or another (tighter vs. looser monetary policy), it can have a large, immediate effect on mortgage rates.  

On the other hand, there are plenty of examples of FOMC Announcement days that have resulted in relatively unchanged mortgage rates the following day.  The point is that FOMC Announcements–particularly those like this week’s which is accompanied by a Bernanke Press Conference and FOMC Forecast updates–carry just about as much POTENTIAL to move markets as anything.  

Today’s BEST-EXECUTION Rates 

• 30YR FIXED -  3.875%-4.0%
• 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 microscopically higher today, but there is little effect on Best-Execution rates and only minor affects on the closing costs associated with those rates.  In other words, the actual interest rate for any given scenario should be the same today as it was yesterday, although the origination cost would be slightly higher (or lender credit toward closing costs slightly lower depending on your scenario).  

When we compute the average Best-Execution rate offerings each day, we’re left with a number that doesn’t line up with an actual interest rate that you’d be likely to see on a GFE.  In the case of recent weeks, this has been between 3.92 and 3.96, which stands to reason considering the prevalent Best-Execution rates are 3.875% and 4.0%.  

It’s interesting to consider that this computed range of 3.92-3.96 has been intact since the disappointing Employment Situation Report on 4/6 helped us break below 4.0 in conjunction with the fact that we’ve been sort of moaning and groaning about how narrow and boring that range has been, only to have it land right on 3.94% to close the week.  The market has spoken (over the last two weeks anyway), and it says: SIDEWAYS!

As such, the parting thoughts will be same as they have been all week: We continue to look toward next week’s FOMC Announcement on Wednesday as a high-risk event, but would note for the risk-takers in the audience, that “risk” doesn’t necessarily have a negative connotation.  We don’t know if next week makes rates go higher or lower.  

We do know that there’s more potential for their movement to be much greater than this week.  The safest rationale combines that truth with the fact that rates have indeed had a hard time getting much lower from current levels.  It COULD happen, but even if it does, those who locked “too early” would likely not miss out on as difference in monthly payment as those who locked “too late.”

Today’s BEST-EXECUTION Rates 

• 30YR FIXED -  3.875%-4.0%
• 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 were flat to slightly improved
today.  Most lenders improved pricing by
very small amounts while a few were slightly worse than yesterday.  On average, rate offerings are in line with
those seen yesterday and on Thursday of last week.

Rates have been in great territory all week with the Best-Execution rate for 30yr Fixed Conventional remaining split between 3.875% and 4.0%.  That means that lenders were widely able to
offer 4.0% rates with no closing costs for well-qualified borrowers and some of
the more aggressive lenders can offer 3.875% for ideal
scenarios. 

The view that market movements might be subdued this week in
favor of the next continues to bear out.  Each time bond markets approach one side of
their recent range, they’ve found an excuse to head back to the other side. 

The recent stability suggests markets remain very interested in the European debt situation, which will get a healthy dose of information tonight in the form of a Spanish 10yr government bond auction.  If it’s stronger than expected, the level of “risk-tolerance” in markets would improve, causing upwards pressure on domestic interest rates. 

But even if the reaction to overnight events causes the biggest rate movements of the week, it likely wouldn’t be enough to nudge rates out of their current Best-Execution ranges.  We’re still of the mind that markets may
be hesitant to move too far in either direction ahead of next week’s FOMC
Announcement (The periodic official statement from the Fed). 

Today’s BEST-EXECUTION Rates 

• 30YR FIXED -  3.875%-4.0%
• 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
• We’ve recently spent time further away from the very best levels of the past few months having broken away from a long, stable trend.
• That led us to expect greater volatility, and indeed we got it!
• But now that volatility MIGHT be depositing us back in a sideways range near all-time lows
• Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally more risk than reward regarding floating
• (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 continued to operate in the same range that has dominated the past three weeks although the closing costs associated with prevailing rates fell slightly.  The net effect is that rates are very slightly lower, very close to the best offerings of the week.

Depending on your point of view, recent trends in mortgage rates have been frustrating or fantastic.  On the one hand, rates continue to operate very near all time lows.  In fact, 3.875% is the lowest stable Best-Execution rate we’ve recorded and it has been available again these past few weeks despite 4.0% constituting a more efficient combination of payment vs cost.  

But the gap in costs between 4.0% and 3.875% rates is such that fewer lenders can offer the popular “no closing cost” quote at 3.875%.  In this sense, the stability has been frustrating for those that have been waiting for things to get just slightly better.  Despite the frustration, this is normal behavior for rates at these levels, i.e. “increasing difficulty in moving lower from this range.”

To say that the underlying markets have been subdued this week would be a huge understatement.  Treasuries and MBS (the Mortgage-Backed-Securities that most directly influence rates) have traded in their narrowest ranges in recent memory.  Even as last week closed out, the current week looked like sort of a dud considering its relative lack of data/events and that the following week contains the extremely important FOMC Announcement.

We continue to look toward next week’s FOMC Announcement on Wednesday as a high-risk event, but would note for the risk-takers in the audience, that “risk” doesn’t necessarily have a negative connotation.  We don’t know if next week makes rates go higher or lower.  We do know that there’s more potential for their movement to be much greater than this week.  The safest rationale combines that truth with the fact that rates have indeed had a hard time getting much lower from current levels.  It COULD happen, but even if it does, those who locked “too early” would likely not miss out on as difference in monthly payment as those who locked “too late.”

Today’s BEST-EXECUTION Rates 

• 30YR FIXED -  3.875%-4.0%
• 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
• We’ve recently spent time further away from the very best levels of the past few months having broken away from a long, stable trend.
• That led us to expect greater volatility, and indeed we got it!
• But now that volatility MIGHT be depositing us back in a sideways range near all-time lows
• Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally more risk than reward regarding floating
• (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)