Mortgage Rates Continue Pattern of Volatility
Great article by Mattew Graham on the current state of the market as of 10/17/2011
Volatility worked agains us on Friday, but in our favor today. After being pushed to the edge of their recent range on Friday, Mortgage Rates eased back slightly lower to begin this week. There's been a bit of ping-pong going on as Best-Execution vacillates between 4.125 and 4.25.
Today's improvement brings Best-Ex solidly down to 4.125%, but it should be noted that pricing varies quite a bit from lender to lender right now.
- BESTEXECUTION 30YR FIXED - 4.125% - lots of variation in both directions
- FHA/VA - 3.75%. Some higher.
- 15 YEAR FIXED- Mostly 3.5%. + or - .125%
- 5 YEAR ARMS - low 3% range, variations from lender to lender.
Ongoing Guidance At 4.25% Best-Execution Levels: you can approach the upcoming days in one of two ways: either rates will continue higher, and the general range of rates would be 4.25-4.75% in terms of Best-Execution, OR we've hit a wall of sorts, and can either bounce lower or hold steady. The more days you wait to determine this, the more money you'll lose if the first scenario plays out and the more you'd gain if the second scenario plays out. If rates don't look like they're holding steady or improving by the end of this week, we'd be locking everything (and fairly close to that sentiment already, but feel it's at least one day too soon to say for sure).
New Guidance: Today's improvements put us in roughly the same situation we were in last Thursday. And so the same guidance essentially applies: "we talked about being close to 4.25% and potentially locking at a loss if things worsened today. But now that things have improved, what do you do if you picked up an eighth of a percent improvement in rate?" There are two ways to approach this... Either you cash in your gains, lock, and move on or you float to see if you can get an extra eighth and resolve to lock if rates rise back to 4.25% Best-Execution levels. There are all sorts of caveats for this (as always), including but not limited to the fact that any mention of floating really only applies to those scenarios who are flexible enough to run the risk of paying more closing costs, a higher rate, or potentially losing a deal altogether. All others shouldn't really try to beat the market when rates are as close as they are to all time lows.
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