|Mortgage Rates Drift Higher Again; Relief In Sight?
October 31, 2014
Mortgage rates stayed surprisingly stable this week despite several potentially unsettling events. Unfortunately, the stability came in the form of a stable trend toward higher rates. Despite the weakness, rates did a good job of holding their ground in the face of several challenging events, offering some hope for a bounce early next week.
The most prevalently quoted conforming 30yr fixed rate for ideal scenarios (best-execution), remained at 4.0% but with 4.125% now a closer runner-up compared to last week.
The week ahead is not without its own market movers. Europe continues to be a major consideration for US rates and the European Central Bank releases their policy announcement on Thursday. One day later, the biggest piece of economic data for the US will be released–The Employment Situation. Either of these events are capable of giving rates a solid push higher or lower, depending how they go. The conclusion is that lock/float decisions should be carefully reevaluated by the middle of next week.
–Matthew Graham, Chief Operating Officer, Mortgage News Daily
30 Year Fixed Rate Mortgage
Week in Review
Rates shown below are based on the 30 Year Fixed Rate Mortgage
Friday, October 24, 2014 : 3.99% (-0.02%)
Mortgage rates caught a break today and were able to ease just slightly lower heading into the weekend. This is somewhat refreshing because yesterday’s bigger move higher was the kind of thing that historically results in further upward pressure. The gains weren’t quite enough to get the average top tier rate quote back into the 3’s for conforming, 30yr fixed loans. 3.875% and 3.75% remain viable for some borrowers looking to pay more money upfront in exchange for a lower monthly payment. In general though, 4.0% is the most prevalent quote today.
More detail: “Mortgage Rates Mildly Lower; Volatile Week Ahead”
Monday, October 27, 2014 : 3.99% (+0.00%)
Mortgage rates were almost perfectly unchanged over the weekend. Most lenders are still right in line with Friday’s most prevalently-quoted conforming 30yr fixed rate of 4.0% for top tier borrowers. That said, most of those rate sheets also still have reasonable costs for borrowers interested in paying more upfront for a lower rate. For instance, the time required to break even on additional upfront costs is roughly 5 years when moving down from 4.0 to 3.875% or 3.75%, depending on the lender.
Today was uneventful in terms of movement in the markets that underlie mortgage rate changes. The rest of the week, however, stands a good chance to be increasingly volatile. Wednesday afternoon’s Fed Announcement is the main event in that regard. The Fed is widely expected to confirm the end of the asset purchases associated with its 3rd round of quantitative easing (QE3). While that won’t be a surprise if it happens, it will require additional verbiage changes in a statement that hasn’t been forced to undergo any meaningful changes in months.
More detail: “Mortgage Rates Holding Near 4 Percent”
Tuesday, October 28, 2014 : 3.99% (+0.00%)
Mortgage rates were almost universally sideways today with very few lenders changing rate sheets noticeably from yesterday. As such, the most prevalent conforming 30yr fixed rate quote remains 4.0% for top tier borrowers. It continues to be the case that paying points upfront in exchange for a lower rate may make sense to some borrowers at these levels. There’s nothing inherently bad or good about that strategy. It’s simply a trade-off between upfront costs and monthly payment.
More detail: “Mortgage Rates Stay Sideways Ahead of Important Fed Announcement”
Wednesday, October 29, 2014 : 4.04% (+0.05%)
Mortgage rates rose to the highest level in 3 weeks after today’s Fed Announcement. The move was a two-part process with initial rate sheets being weaker in the morning and mid-day reprices (lenders raising rates) following the Fed. The pace of the movement was moderate, leaving 4.0% intact as the most prevalently-quoted conforming 30yr fixed rate for top tier borrowers, but 4.125% is now much closer than it had been. Many lenders are already there today.
It’s important to understand that the Fed ending QE and today’s rise in rates are not in a direct causal relationship. Market participants unanimously agreed that today would mark the end of the Fed’s third round of quantitative easing (QE3) and that part of the announcement was no surprise.
More detail: “Mortgage Rates at 3-Week Highs After Fed Ends QE”
Thursday, October 30, 2014 : 4.01% (-0.03%)
Mortgage rates pulled back to hold near 4 percent after rising to the highest levels in 3 weeks. After yesterday’s Fed announcement, the most common rate quotes were at risk of edging up to 4.125% for top tier borrowers. While some lenders are still in that range today, the improvement keeps the balance tipped decisively toward 4.0%. In other words, both rates are out there today, but 4.0% is more prevalent. In general, rates are nearly back in line with Tuesday’s.
Whether rates had simply had enough of their recent move higher or whether they’re just more in tune with weakness in the European economy, today’s stronger GDP report didn’t have any impact.
More detail: “Mortgage Rates Recover Slightly; Holding Near 4 Percent”
Friday, October 31, 2014 : 4.03% (+0.02%)
All things considered, bonds–especially the Mortgage-Backed-Securities (MBS) that govern mortgage rates–held up quite well. In other words, this is one of the few instances where a bad day for rates may actually turn out to be good in the long run. Volatile market conditions put bond markets to the test, and provided them an opportunity to display some innate resilience.
Next week is not without its own market movers though. Europe continues to be a major consideration for US rates and the European Central Bank releases their policy announcement on Thursday. One day later, the biggest piece of economic data for the US will be released–The Employment Situation. Either of these events are capable of giving rates a solid push higher or lower, depending how they go. The conclusion is that lock/float decisions should be carefully reevaluated by the middle of next week.
More detail: “Mortgage Rates Slightly Higher After Big News From Japan”