Record Low Rates and Future Guidance

By
Real Estate Mortgage Broker with West Town Savings Bank

CURRENT MARKET*: The BestExecution 30-year fixed mortgage rate is between 4.000% and 4.250%. Several lenders are willing to offer 4.000%, 4.250% is widely available, and we've actually seen strong 3.875% quotes too. On FHA/VA 30 year fixed BestExecutionis 4.00%. Some lenders are willing to go as low as 3.75% without extra closing costs. 15 year fixed conventional loans are best priced at 3.625% but we're seeing aggressive quotes as low as 3.375%. Five year ARMs are still best priced at 3.25. ARMs seem to have bottomed out.

While many lenders have greatly improved their consumer rate quotes over the past few days, we must point out an increased amount of variation in what individual lenders are quoting as theirBestExecution rates. This is a factor of price volatility in the secondary mortgage market. Unfortunately when volatility picks up in the secondary mortgage market, the cost of doing business gets more expensive for lenders (hedging costs go up). Those added costs are usually passed down to consumers via extra margin in rate sheets. These costs are unavoidable. The best thing for mortgage rates right now is stability.

GUIDANCE: If you missed the boat on record low mortgage rates last November/October, the opportunity is once again out there for the taking. We think you should jump on it as soon as possible. The risks involved in floating have greatly expanded to include lenders taking it upon themselves to negatively adjust rate sheets (to slow loan production).

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Topic:
ActiveRain Community
Location:
Connecticut
Groups:
All About Fairfield County, Connecticut.
Bergen County, New Jersey
Connecticut Professionals
Westchester County
Westchester Real Estate Network (WREN)
Tags:
mbs
mbs market
mortgage
mortgage rates
mortgages
rates
refinance
loans
home loans

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Rainer
77,858
Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas

Jon-what are your thoughts on the ugly treasury auction yesterday? Granted, this is the first ugly one, but yields could inch up if we have 2-3 more ugly ones.

August 12, 2011 11:13 AM
Rainer
30,868
Jon Starr
West Town Savings Bank

I do not think there are any rational explanations anymore or at least not now. The markets are moving widely on speculation, news and sometime data. I believe that rates will stay in this range for at least the next 3 to 6 months. What are you thoughts? JS

August 12, 2011 11:19 AM
Rainer
77,858
Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas

Jon- I with you. Fundamentals don't mean jack. There in is the problem. I worry about the bid to cover. This last auction had a 10bp tail. If this keeps up we may see unintended consequences of artificial interest rates,

August 13, 2011 12:42 PM
Anonymous
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Rainer
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Jon Starr

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