Peak Home Loan

Mortgage Rates Suffering From Low-Volume Market Movements

2011-12-25T20:13:00.000-08:00

Dec 23 2011, 1:22PM

Mortgage Rates suffered their worst losses of the week today as light volume and low participation left sellers in control, driving benchmark interest rates higher. When we talk about "sellers," it's in reference to sellers of fixed-income securities in bond markets. The Mortgage-Backed-Securities (MBS) that most directly influence mortgage rates are part of the broader bond markets and tend to move in the same direction as the most popular bond: 10yr Treasury Notes. When sellers outnumber buyers, prices get lower and lower, bringing yields (aka: interest rates) higher. This is happening fairly rapidly for Treasuries, but to a lesser extent for MBS (and consequently lender's rate sheets). Best-Execution 30yr Fixed rates STILL haven't moved higher, but closing costs are quite a bit higher at many lenders today.

What we said yesterday: "Low volume and year-end lack of participation continue to distort movements in the secondary mortgage market. The lower a market's volume, the more weight carried by those who participate meaning that it takes fewer trades/less money to move things around. In general, MBS (mortgage-backed-securities) have pitched and rolled less (for better or worse) than their Treasury counterparts."

Please make sure to read the "important rate disclaimer" at the bottom of the page in considering what "all-time lows" means. The issue of "buckets" as described in the lock/float considerations below, remains a factor that may prevent rates and/or fees from moving significantly lower in the short term.

Mortgage Rates Improve After Jobs Data, But Not Because of it.

2011-12-02T14:01:00.000-08:00

Although markets had been focusing on this morning's Employment Situation Report as a high-risk event (and indeed it was), the report was mixed enough that it didn't send either side of the market hurtling recklessly in one direction or the other. Things were actually fairly equivocal until news out of Washington began making rounds that GOP lawmakers would try to prevent increased US participation in the potential IMF bailout of Europe. Mortgage rates ultimately improved today because of events such as those--unrelated to the jobs report. In other words, the jobs data had a CHANCE to be a big market mover, but ultimately left the door open for other contenders.

Lenders are smart enough to know about the high-risk nature of that event, so it makes sense that we're seeing a VAST majority of lenders adjust rates lower through the course of the day. Best-Execution is STILL most prevalent at 4.0%, but there are slightly more 3.875's today and far fewer 4.125's. No change to the ongoing guidance below. In fact, if you saw your rate move an eighth lower today, we'd be even more interested in locking that in.

Today's BEST-EXECUTION Rates

30YR FIXED - 4.0%, increasing amount of 3.875's.
FHA/VA - 3.75%, fewer 3.875's
15 YEAR FIXED - 3.375%-3.5%
5 YEAR ARMS - low 3% range, huge variations from lender to lender.

Mortgages Rates Don't Budge Heading Into Holiday Weekend

2011-11-23T22:42:00.000-08:00

Today might as well have not even existed in the world of Mortgage Rates. They're exactly the same as yesterday. In fact, today is the first day ever that I can remember all of the day over day changes on our rates page being 0.00. Things may get shaken up a bit next monday, but there's no telling which direction yet. There's a good chance that markets will have some reasonably important headlines out of Europe to digest over the weekend in addition to Thanksgiving dinner.

On that note, markets are closed tomorrow for the holiday, and although they are technically open again on Friday, we're not expecting much to happen until next week, effectively making for a 4-day weekend. If we don't see you between now and then, Happy Thanksgiving!