Monthly Archives: January 2015
Mortgage rates were steady to slightly higher today on average. Some lenders were actually slightly lower, but they were the exception. In contrast to yesterday, the bond markets that underlie rate movements were exceedingly calm, and what little movement there was came in measured doses. This sort of low-altitude, sideways bounce is a fairly common occurrence following a bigger move lower in bond markets.
The distinction between bond markets and mortgage rates is important here, because mortgage lenders haven’t been able to pass along all of the gains implied by trading levels. If markets manage to calm down a bit, that means rates have some room to improve even if trading levels simply hold steady. That process can only happen gradually over multiple days and could easily be thrown off by more volatility.
Even if rates held steady, they’d be doing so essentially right in line with the best levels since early May 2013. 3.625% remains a widely-available conforming 3yr fixed quote for top tier scenarios and several aggressive lenders are at 3.5%.
- 30-year fixed-rate mortgage (FRM) averaged 3.66 percent with an average 0.6 point for the week ending January 29, 2015, up from last week when it averaged 3.63 percent. A year ago at this time, the 30-year FRM averaged 4.32 percent.
- 15-year FRM this week averaged 2.98 percent with an average 0.5 point, up from last week when it averaged 2.93 percent. A year ago at this time, the 15-year FRM averaged 3.40 percent.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.86 percent this week with an average 0.4 point, up from last week when it averaged 2.83 percent. A year ago, the 5-year ARM averaged 3.12 percent.
- 1-year Treasury-indexed ARM averaged 2.38 percent this week with an average 0.4 point, up from last week when it averaged 2.37 percent. At this time last year, the 1-year ARM averaged 2.55 percent.
Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following links for the Regional and National Mortgage Rate Details and Definitions. Borrowers may still pay closing costs which are not included in the survey.
Mortgage rates fell again today, and while the move wasn’t big, it was enough to bring most lenders back in line with the best rates from two weeks ago. Those have the added distinction of being the best rates since May 2013. At these levels, 3.625% is widely available as a top tier conforming 30yr fixed quote and a few lenders are quoting 3.5%. Even if your lender isn’t, you can likely choose to pay higher upfront costs in exchange for the lower rate. This is neither good nor bad, but simply a matter of personal preference. You can divide the upfront cost increase by the monthly payment savings to determine how many months it would take to break even on the additional expense. If the trade-off makes sense to you, it makes sense. If not, stick with the higher rate.
Today’s big market event was the Fed Announcement. Markets weren’t expecting much of a change and they didn’t get one. But that didn’t stop the reaction from getting surprisingly large in terms of trading levels (in both stocks and bonds). The post-Fed move was positive for bond markets, and thus positive for rates. That means that many lenders were NOT at their best recent levels this morning, and only got there after mid-day reprices following the Fed-induced rally.
The big question of the day is whether or not the good times will continue for rates. In a word, yes. But as has been the case for nearly a year now, the good times will only continue until European growth and stability concerns turn a meaningful corner. That’s not the sort of thing that will happen in a day or that would be able to be identified in real time. So there will be a period of conjecture when the time comes. All we can know is that we’re not there yet. That said, we also know there can and will be head-fakes back toward higher rates even while the broader trend is positive/lower.
Mortgage rates moved lower after Friday mornings Employment Situation Report, though not necessarily because of it. After 2 days spent correcting from strong move lower in stock prices and bond yields, markets had had enough. In other words, global financial markets moved one way from December 29th and then the other way on Wednesday and Thursday.
Soon after the big jobs report, it became clear that stocks and bond yields (which are analogous to mortgage rates) weren’t willing or able to go any higher. The bounce back in the other direction was fueled by overseas headlines concerning the hostage situation in France. European markets led US bond markets back toward lower rates into the noon hour. When Europe closed, domestic markets were obviously done with that move, but didn’t snap quickly back into weaker territory. This allowed many mortgage lenders to drop rates in the early afternoon.
The improvements bring rates in line with those seen on Wednesday. These weren’t quite as good as Tuesday’s, but apart from that, they’re the lowest in the past 19 months. 3.75% is an easily quotable conforming 30yr fixed rate for most lenders dealing with a top tier scenario. 3.625% is available to a lesser extent.