Mortgage rates moved back up to the highest levels of the week, confirming a bumpy ride between now and next week’s big jobs report.  The day began in a docile enough fashion but was soon disrupted by stronger than expected economic data.  Trading conditions deteriorated further in the afternoon prompting many lenders to recall rate sheets for a mid-session move higher.  With those changed, the closing costs associated with the current 4.0% best-execution rate moved back to the highs seen on Tuesday afternoon.

Yesterday’s thoughts (after two days of improvements in rates) still apply.  It continues to be the case that we could move sideways to lower, and of course rates just demonstrated their willingness to snap back to recent highs:

The important message is that we’re not out of the woods on rate volatility, even if shorter term corrections seem to suggest it.  It may well be the case that move sideways to lower heading into next Friday and catch a break with the data, but it’s also possible that markets take rates back to recent highs as they test out all possible locations for the donkey’s tail before taking off the blindfold on the morning of the Jobs Report.

Loan Originator Perspectives

My comments all week have indicated a locking bias, which is difficult because volatility can lull you into thinking things are going to get better. But that stance turned out to be the right one this week, as the rate spike resumed to end the week. This trend is likely to continue next week. ” –Julian Hebron, Branch Manager, RPM Mortgage

“No playing games with your home loan and floating is playing games in my book. I’m locking everything and advising to lock as insurance against more pain next week. The only thing that will slow this train down is a bad jobs report. Even if we hit the 170K consensus, which is not a real good number to begin with, rates will still rise. Beat the number and look out….Friday morning will be an early start to the weekend.” –Mike Owens, Partner, Horizon Financial Inc.

“MBS markets took another direct and massive hit today as Chicago PMI and consumer sentiment reports both trumped expectations handily. We lost a lot of ground in a hurry,and while we haven’t yet broken our recent lows, today’s rates approached the highs from last week’s debacle. We’ve been consistently locking loans at application,and will continue to at least avoid floating for any time. Too much risk floating these days when pricing can change by .5% in a matter of 10 minutes!” -Ted Rood, Senior Originator, Wintrust Mortgage

“Do you think the market will come back? Answer: It doesn’t matter. In an environment of rising rates, a bird in the hand is better than two in the bush. Borrowers should strongly consider locking the very day they are eligible to do so, as worst case scenario they can refi again, if and when rates come back. It appears that is not likely, so take the lowest rate for the day and be happy that you were still able to capitalize near the historical bottom….you can still hold your head high at the cocktail party.” –Brandon Blue, CA Broker & Owner at BlueLoanServices.com

Today’s Best-Execution Rates

  • 30YR FIXED – 4.00%
  • FHA/VA – 3.25% or 3.75%
  • 15 YEAR FIXED –  3.125%
  • 5 YEAR ARMS –  2.625-3.25% depending on the lender


Ongoing Lock/Float Considerations

  • After rising consistently from all-time lows in September and October 2012, rates challenged the long term trend higher, but failed to sustain a breakout
  • EU and domestic economic data remain relevant to mortgage rates, but uncertainty over the Fed’s bond-buying plans through the rest of the year is causing volatility
  • The further we’ve progressed into 2013, the faster the swings have become
  • Fears about the Fed’s bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed confirmed their intention to taper bond buying programs sooner vs later
  • Just as the pendulum pushed far to the positive side of the rate range in April, the opposite swing occurred in May (now the worst single month for rates on record since 2008)
  • (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).