Mortgage Rates Fly Holding Pattern Just Over 4 Percent

by Matthew Graham

Mortgage rates continued flying their recent holding pattern just over 4 percent.  Most lenders' rate sheets were essentially unchanged compared to yesterday's latest.  Additionally, we never saw enough bond market movement during the course of the day to justify any mid-day changes.   The most prevalent Conforming  (best-execution) has been pinned to 4.125% with very little change in associated closing costs for a week now.

Because most lenders adjust rates in 1/8th (0.125%) increments, the next time the best-execution quote moves lower, 30yr fixed rates will be back at 4.0%.  Some lenders are offering that now, but it's not the norm, and may involve additional closing costs. 

So is it possible that we'll see a more broad-based move down into the high 3's?  In a word, yes, but caveats apply.  The concept of a "holding pattern" is carefully chosen because rates are indeed circling the runway, waiting for permission to land.

That permission can only be granted by economic developments that are "negative enough."  Specifically, markets would need to see more evidence that the labor market is weak enough to unequivocally delay the Fed's timeline for reducing its bond buying program–one major factor in lower rates overall.

The surest bets when it comes to such data are the once-a-month Employment Situation Reports, such as last Tuesday's.  Due to shutdown rescheduling, the next report is coming up next Friday!  Even tomorrow, we'll get several pieces of data that will help decide the fate of the "circling plane," including the ADP Employment numbers which attempt to forecast next Friday's numbers.  The FOMC releases a policy announcement in the afternoon, and although traders agree we're not likely to see any policy change that hurts rates, it could still make for an afternoon where rates are actually higher or lower than the past afternoons.

Loan Originator Perspectives

"Still within a confined range, safe to say tomorrow will bring a bit more to the table however the recent trend prevails. Floating appears to be safe, however with rates at multi-month lows, locking must be considered. Tomorrow's FOMC is key to any volatility, not expecting anything groundbreaking. Float on!" –Constantine Floropoulos, Quontic Bank

"Consumer confidence readings released today were the lowest since April, likely not a surprise given recent DC dysfunction. The 5 year Treasury auction came in as expected. Net result was a range bound, but slightly higher day for MBS. Tomorrow's Fed Minutes should provide interesting details on their perspective on shutdown's impact on the economy. Any pro/con tapering hints will certainly impact rates' future direction." –Ted Rood, Senior Originator, Wintrust Mortgage

"Rates remain the the low 4% range (check with your Loan Originator on your specific scenario). Lock if you like. You can not lose by locking a rate you are comfortable with." –Bob Van Gilder, Finance One Mortgage

"I think the big question is will rates dip below 4%. I feel they will and possibly next week. We'll have to see, but the economic data I believe will confirm a slowing economy which should push rates down. Home sales numbers continue to disappoint. That's the last thing the FED wants." –Mike Owens, Partner, Horizon Financial Inc.

Curious about current mortgage rates? Give us a call, text or email. We would love to talk with you about your mortgage rate questions!

-Steve and Sandra

Steve Hill and Sandra Brenner
Windermere Real Estate/FN
122502 Greenwood Ave N
Seattle WA 98133
call/text: 206-769-9577
email: stevehill@windermere.com

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