Mortgage rates can seemingly do no wrong this week. They fell again today–this time making it firmly into territory not seen since late April. At current levels, many lenders have moved on to quoting conventional 30yr fixed rates of 3.75% on top tier scenarios. 3.875% is nearly ubiquitous, and you’d be more likely to see 3.625% before 4.0%. In other words, we’re not merely dabbling in the upper reaches of the “high 3’s.” Rates are legitimately in the 3% range–for now.
Today’s improvements, and indeed some of the improvements earlier this week have NOT been captured by Freddie Mac’s weekly Primary Mortgage Market Survey–the industry standard for mortgage rate tracking. While the survey is highly accurate over the long haul, its methodology doesn’t allow it to capture all of the movement in any given week. In fact, the only rate sheets that inform the survey response are those that come out on Friday afternoon through Wednesday morning. Moreover, the survey responses tend to arrive more toward the beginning of the week. That means if things are moving fairly quickly over the course of the week, Freddie’s survey will be a bit behind the curve.
There’s nothing good or bad about the lag in the Freddie Mac data. It’s a valuable resource that just happens to be a bit too ‘wide-angle’ for the average borrower or originator seeking the most up-to-date information on rates. I only bring it up because almost every major news outlet relies on the Freddie report for its official weekly article on mortgage rates. Today, those articles will be saying there hasn’t been much of an improvement over last week, and it’s important you know that’s no longer the case.
This is a timely piece of information as well, because tomorrow brings the important Employment Situation report (aka “jobs report, nonfarm payrolls, or NFP”). This is the biggest piece of economic data that comes out each month and it has the greatest potential to cause movement in the bond markets that dictate mortgage rates. With rates at 5-month lows and even a 50% risk of a big bounce higher, it’s even harder to make a case against locking today. Granted, risk-takers could be rewarded if the report is exceptionally weak, but even then, we have to consider that rates can sometimes bounce higher simply because they’ve gotten tired of moving consistently lower. We’re not quite to the point where that’s an imminent risk regardless of the data, but certainly, an equivocal jobs report wouldn’t make any strong arguments for rates to continue lower.
Loan Originator Perspective
“I am very surprised we are seeing bonds improve once again this morning. With non farm payrolls due out in the morning, I think today is another great opportunity to lock in. Tomorrow’s report can have a major impact on rates. With as low as rates are today, the risk is to the upside. I think there is more to lose than to gain by floating.” -Victor Burek, Churchill Mortgage
“Rates have been rallying of late in the face of some worldwide volatility and appear to have broken through some resistance. However, with the Jobs Report looming tomorrow, the most important and potentially market moving data piece, I would be taking advantage of the gains and locking them in to protect them. This is especially true if your closing is within 30 days. If your closing is more extended some patience in locking might be beneficial but of course, it might not. Why not lock?” -Hugh W. Page, Mortgage Banker, SeacoastBank
“Mortgage Rates improved slightly, again, today, but we remain at the bottom of the range. My opinion remains the same that locking is the best course of action.” -Brent Borcherding, brentborcherding.com
Today’s Best-Execution Rates
30YR FIXED – 3.75 – 3.875
FHA/VA – 3.5 – 3.75%
15 YEAR FIXED – 3.125 – 3.25%
5 YEAR ARMS – 2.75 – 3.25% depending on the lender More here.