Monthly Archives: June 2016
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.
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.