September 2oth., 2013 - Mortgage rates moved moderately lower on average today. Not all lenders improved, but most did. Those who were in similar or higher territory compared to yesterday's latest rates were in no way close to the previous day's rates, or even those from yesterday morning.
If that was a bit too circuitous to follow, try this: mortgage rates got rocked yesterday, in a good way. The big move happened in the afternoon. Every lender is in much better territory today vs yesterday morning, but some of the lenders had already adjusted rates quite a bit by yesterday afternoon, and thus, had less catching up to do today. On average, the gains were solid, bringing us to the lowest levels since August 12th.
Conforming, 30yr Fixed rates remain at 4.5% with some of the more aggressive lenders still competitively priced at lower rates (best-execution). This doesn't mean that 4.25% at one lender would be equivalent to 4.5% at another lender in terms of closing costs--simply that the 4.25% scenario may be worth looking into to see if the extra cost makes sense for you.
The story behind today's rate movements is really yesterday's big news regarding the Fed abstaining from any significant policy changes. As far as the trading levels of mortgage-backed-securities (MBS) that underlie mortgage rates, they actually would indicate higher rates today. This is one of the very few times you'll see rates move opposite MBS and Treasury yields. Reason being: lenders aren't able to keep pace with movement that swift and unexpected. Furthermore, they couldn't run the risk of a bigger reversal today, because they'd be on the hook for locked rates that were too aggressive. As such, they passed along a good amount of improvement yesterday and had some more in reserve for today, allowing for improved pricing despite the market reversal.
By MORTGAGE NEWS DAILY
Home Sales Climb as Americans Rush to Lock in Rates: EconomySales of previously owned U.S. homes unexpectedly rose in August to the highest level in more than six years as buyers rushed to lock in interest rates before they increased further.
Purchases climbed 1.7 percent to a 5.48 million annual rate, the most since February 2007, figures from the National Association of Realtors showed today in Washington. The median forecast of 79 economists in a Bloomberg survey called for 5.25 million. Other figures showed Philadelphia-area manufacturing expanded at the strongest pace since March 2011.
The housing data reflect transactions begun in June or July, when buyers were trying to get loans at mortgage rates near record lows. The Realtors’ chief economist said sales will probably cool, which combined with figures showing a slump in new-home demand and weaker-than-projected construction explains why the Federal Reserve yesterday decided to maintain stimulus.
“We’ll continue to see increases in home sales and prices, though not as fast as in August,” said Gus Faucher, a senior economist in Pittsburgh at PNC Financial Services Group, which is the best forecaster of existing-home sales over the past two years, according to data compiled by Bloomberg. “The Fed’s decision to hold off on tapering is understandable. We’ll see stronger economic growth toward the end of the year.”
Stocks fell a day after the Standard & Poor’s 500 Index climbed to a record on the Fed’s decision to refrain from cutting stimulus. The S&P 500 dropped 0.2 percent to 1,722.34 at the close in New York.
News Summary: US rates on 30-year mortgages dip
RATES DECLINE: Average U.S. rates on fixed mortgages fell this week amid signs that the economic recovery is slowing.
THE NUMBERS: Mortgage buyer Freddie Mac says that the average rate on the 30-year loan fell to 4.50 percent from 4.57 percent last week. The average on the 15-year fixed mortgage dipped to 3.54 percent from 3.59 percent last week.
FED HOLDS OFF: Many economists had expected the Fed would to decide this week to scale back bond purchases that have kept long-term rates extremely low. The central bank voted on Wednesday to continue the program at current levels.
By BLOOMBER BUSINESS WEEK.