Monthly Archives: June 2016

Mortgage Rates Higher Still Despite Market Improvement

Mortgage rates were higher for a 4th straight day today.  That is a bit of a puzzler at first glance because bond markets are showing improvements from yesterday.  10yr yields are 0.02% lower and even the mortgage-backed-securities (MBS) that dictate mortgage rates are in better territory.  So why no love for mortgage rates themselves?

Most of this has to do with the timing and intensity of yesterday’s market movement.  MBS weakened at a gentle pace throughout the day.  The losses were sufficient for several lenders to adjust rates higher, but most lenders kept rates unchanged from the morning.  Therein lies the problem.  While it’s true that bond markets are in stronger territory versus yesterday’s latest levels, they’re still not quite back to the levels in effect yesterday morning when lenders put out mortgage rate sheets.  Long story short, most lenders didn’t adjust rates to account for yesterday’s weakness and are simply getting caught up today.

3.625% is once again the most prevalent conventional 30yr fixed rate for top tier scenarios, although 3.5% is by no means extinct.  Tomorrow brings the much-anticipated vote on membership in the European union for the U.K. (aka “Brexit”).  As far as we know right now, the biggest risks from an interest rate standpoint won’t materialize until Friday morning, but we could see the effects as early as tomorrow afternoon.

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Mortgage Rates Deeper into 3-Year Lows

Mortgage rates moved lower today, largely because they needed to get caught up with yesterday afternoon’s movement in bond markets.  As a reminder, mortgage rates are most directly affected by mortgage-backed-securities (MBS), which tend to move in the same direction as US Treasuries.  Both MBS and Treasuries improved significantly after yesterday’s Fed announcement, but lenders have been cautious in adjusting rate sheets to match market movements for a variety of reasons.  When they saw markets were still in good shape when it came time to send out this morning’s rate sheets, lenders had a bit more love to share.

As such, we find ourselves well into the lowest rates in more than three years, even if the pace of improvement is lagging the drop in US Treasury rates.  For what it’s worth, 2016’s mortgage rate improvements have kept up with Treasuries much better than in 2012–the last time markets were moving abruptly for somewhat similar reasons.  The average lender is now down to 3.5% in terms of conventional 30yr fixed quotes for top tier scenarios.  Further improvements from here will be hard fought, so it makes good sense to consider locking to avoid a temporary pull-back ahead of next week’s vote on the British referendum on remaining in the European Union.

Mortgage Rates Close to All-Time Lows

Mortgage rates moved slightly lower today, bringing them to levels seen only one other time in the past 3 years.  Even then, that was only for a few hours on February 11th.  This time around, we’ve been holding near these 3-year lows in much more stable fashion.  If rates are able to move any lower from here, that will put them in line with all-time lows. That would connote an average conventional 30yr fixed rate of 3.375%, which isn’t too far away considering more than a few lenders are quoting 3.5% on top tier scenarios today.  3.625% remains slightly more prevalent.