|Rates Recover Modestly to Close Out Bad Month
February 27, 2015
After an unpleasantly quick ride higher last week, and during the month of February in general, mortgage rates finally caught a break this week. It wasn’t an extreme bounce back, but after the last 3 weeks, any relief is a welcome sight.
After markets came to terms with Greece’s bailout extension (a key component in last week’s weakness), it was on to waiting on the edge of our seats to see if Fed Chair Yellen would have anything disturbing to say about the prospects for a near term rate hike. As her first day of Congressional testimony ended without any alarming anecdotes, bond markets moved quickly toward lower rates.
Top tier borrowers are mostly back to seeing 3.75% as the lowest conventional 30yr fixed offering, whereas 3.875% had been much more prevalent last 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, February 20, 2015 : 3.85% (+0.01%)
Mortgage rates are ending the day in very similar territory to yesterday’s latest levels but have had something of a wild ride between now and then. At issue is the ongoing drama between Greece and its Eurozone creditors. There was some risk heading into today that a temporary agreement would be reached to extend Greece’s bailout agreement, and indeed that’s behind the volatility.
More detail: “Mortgage Rates End Unchanged Despite Massive Market Volatility “
Monday, February 23, 2015 : 3.85% (+0.00%)
Mortgage rates ended the day in almost perfectly unchanged territory versus Friday’s despite trading levels improving in the secondary mortgage market. In other words, the mortgage-backed-securities that dictate lender’s rate sheets suggested a modest improvement–an improvement that we’re not really seeing. That said, of the few lenders who moved today, most have moved slightly lower. The most prevalently-quoted conventional 30yr fixed rate remains 3.875% for top tier scenarios, though 3.75% is certainly not unheard-of.
The rationale for the conservative approach can vary from lender to lender, but several factors are likely in play. First and foremost, volatility will always hurt lenders’ ability to move mortgage rates in proportion to the rest of the bond market.
More detail: “Mortgage Rates Mostly Flat Ahead of Yellen Testimony”
Tuesday, February 24, 2015 : 3.79% (-0.06%)
Mortgage rates had their best day of the month today following Fed Chair Yellen’s testimony before the Senate Banking Committee. That’s part of a 2-day semi-annual update that the Fed gives to congress. In this modern electronic age, it’s a wholly unnecessary relic from a bygone era when everything that every member of the Fed has said on the record wasn’t instantly available on the web. And so it has devolved into a painful display of American bureaucracy where congress-people can vent their frustrations or display their ignorance for a quick sound-byte. All that having been said, markets still treat this as the Fed Chair’s twice-a-year chance to set the record straight in a Q&A format, less constrained by the formalities of official FOMC communications.
More detail: “Best Day of the Month for Mortgage Rates”
Wednesday, February 25, 2015 : 3.77% (-0.02%)
Mortgage rates had a bad Valentines Day. It’s not that anything happened on that Saturday. Indeed, lenders weren’t even open. It’s just that things changed significantly by the time US markets reopened on Tuesday, with rates moving higher at the fastest pace in over a year. After a purely corrective bounce the following day, rates spent the next three days in limbo. That brought us to yesterday’s big move lower following Yellen’s testimony and an anticlimactic Eurozone response to the Greek bailout (initial approval), but it was an outlier against an otherwise crummy trend toward higher rates in February.
More detail: “Mortgage Rates Finally Feeling the Love”
Thursday, February 26, 2015 : 3.79% (+0.02%)
Mortgage rates were slightly higher today, undoing the modest gains seen yesterday, but leaving the more significant drop from Tuesday intact. 3.75% remains the most prevalently-quoted conforming 30yr fixed rate for top tier scenarios, though a few lenders will have drifted up to 3.875% with today’s weakness.
Today’s losses were a factor of both data and events. This morning’s economic data was mixed, but higher Durable Goods and Real Wages overshadowed higher Jobless Claims. The data started the ball rolling in a negative direction for the markets that affect mortgage rates this morning, and from there, several month-end trading dynamics made for steady losses throughout the day. Particularly, companies issued corporate bonds at a rapid pace this afternoon, and that issuance process can indirectly put some upward pressure on rates.
More detail: “Mortgage Rates Move Slightly Higher Ahead of GDP”
Friday, February 27, 2015 : 3.77% (-0.02%)
Mortgage rates managed to scrape together modest gains for today’s month-end session. In terms of the financial markets that dictate mortgage rates, the last day of the month can be a volatile day that shuns the normal cause and effect relationships between data and market movement. Today’s example thankfully bucked that trend (perhaps because the rest of the month had already given us plenty of volatility). Trading levels were stable to stronger all day, allowing many lenders to drop rates in the middle of the day.
3.75% remains intact as the most prevalently-quoted conventional 30yr fixed rate for top tier scenarios, though 3.875% is still fairly common. Lenders erred on the side of caution, in general, in that they didn’t quite keep pace with the improvements in underlying markets. In other words, they’ll have some extra improvement to pass along if markets hold their ground to start next week.
More detail: “Mortgage Rates End Bad Month on Good Note”