Mortgage Rates Rocket to Lowest in a Year


Mortgage rates dropped significantly today, officially hitting the lowest levels in almost exactly 1 year.  For most lenders, that means a conventional 30yr fixed rate quote of 3.625% for top tier borrowers, though there are still quite a few lenders at 3.75%.  That's an important point to keep in mind today as several lenders are still much closer to Friday's rates.  Even then, a "significant drop" will mean different things depending on your point of view.

For instance, if you follow each day's market movement, today is indeed a bigger drop in rates than average.  In fact, there are usually less than 20 days in any given year that move this much.  From another perspective, it leaves plenty to be desired.  Case in point: lots of lenders are still quoting the same rates as Friday, but with slightly lower closing costs.  Lenders who are quoting lower rates won't have moved any more than 1/8th of 1 percent (0.125%). 

This is a symptom of a well-known disease in the mortgage market.  The bonds that underly mortgage rates (MBS or "mortgage-backed-securities") tend to act more like the rest of the interest rate world when trading is calm, but they tend to underperform when the rest of the interest rate world is moving quickly lower.  So on days like today when 10yr Treasuries (a perennial yard-stick for MBS and mortgage rates) is down 10bps, it's no surprise to see most lenders haven't lowered rates by a similar amount. 

Theoretically, if market trading levels held their ground right here, mortgage rates would have a bit farther to fall, but of course, there's never a guarantee that markets will hold their ground.  We have a positive long-term trend that is very much intact.  It has consistently offered opportunity this year.  The opportunity is offset by the risk that markets will bounce along with the enticement of the lowest rates in more than a year.


Loan Originator Perspective

"Rates are low.  Lock.  Renegotiate if you need to, if rates drop further.  Don't miss out.  Buyers...lock.  What do you mean you didn't refinance before?  Do it. Now." -Matt Hodges, Charlottesville Sales Manager, Presidential Mortgage Group

"Rates continue to move lower.   If you have been floating, you should be seeing a lower interest rate.  At this point, if you lock, you walk away a winner, and there is never anything wrong with that.  If you can tolerate the risk, I think I would continue to float and see if this rally can extend even further.  The trend is our friend right now." -Victor Burek, Churchill Mortgage


Today's Best-Execution Rates

    30YR FIXED - 3.625 - 3.75%
    FHA/VA - 3.5%
    15 YEAR FIXED - 3.125
    5 YEAR ARMS -  2.75 - 3.25% depending on the lender