After Monday’s big move, the over-all scope of the movement of mortgage rates has been exceptionally small. After achieving its highest levels for more than a week, the rates were found to have decreased on an average. In fact, most lenders are found to offer lower quotations but there are still some who gives higher. Further, most lenders are seen to quote the conventional 30-year fixed rates of 3.75% to most top-tier borrowers while there are those who gives aggressively at 3.625%. Hence the average quote is likely to have the same contract rate as before, but with the addition of having lower closing costs.
Despite the changes, the short-term trends observed are biased toward the higher rates whereas the long-term trends are seen leaning toward the lower rates and is seemingly unable to improve. Though this may indicate that those with longer time horizons or those with more risk tolerance are able to benefit from the floating, the rates are forecasted to be leaning on the long-term lows that the amount of gains one may attain against the risk one may take seems problematic.
In fact, for one to be able to be more certain of the rewards he or she may reap given the risks is for the rates to break the recent low trends. Until then, the 3.625% is as low as what average rates could be (since late January). There is a need to see the widespread availability of 3.5% in the mortgages rate in order for one to entertain the possibility that the downtrend is extending.
As of today, the best execution rates are as follows:
Today’s Best-Execution Rates
30 YR FIXED – 3.625 to 3.75%
FHA/VA – 3.25 to 3.5
15 YR FIXED – 3.00 to 3.125
5 YR ARMS – 2.75 to 3.25% depending on the lender
Ongoing Lock or Float Considerations
In this section are the considerations one must check in terms of ongoing lock and floating.
Year 2015 opened with a strong move towards the lowest rates recorded since May 2013. The forces behind this were Europe and the introduction of the European Quantitative Easing (Q.E.)
With QE beginning, people are at watch for Europe’s improvement in terms of its economic data, sentiment, growth, and rates. Once the country progresses in these areas, there will be a greater risk that both the domestic bond markets and the mortgage rates will also experience a higher increase. In fact, there is also that possibility that this improvement had already occurred in February and has helped anchor the domestic bond markets toward higher rates. It is a note however, that the European bonds were again subjected to enhancements in March.
Though the present seems to be a problematic time for global financial markets, some believe that we are in the midst of a race among world central banks in terms of devaluing currencies and lowering interest rates. Also, there are those who are certain that the global economy is turning a corner and the rates will be higher. Corollary to this will be the creation of volatility which is known to be bad for mortgages rates.
A possible result would be there will be a hard time keeping at pace with the movement of the Treasuries; which can be good or bad depending on the way which the market is moving. On the other hand, another result may be that there would be no way to ensure that today’s rates are would still be the same. The point is, there is a possibility for more changes and movements in the mortgage market in 2015.
Always remember the rates discussed here generally refer to what have been termed as the “best-execution” which means the ones most frequently quoted, those that are conforming, and those conventional 30-year fixed rate for top tier borrowers which are based not only on the outright price, but also ‘bang-for-the-buck’.