Homes for sale huntsville Huntsville Alabama Real Estate

Mortgage Rates: Losing Streak Continues

Source; Kristie Phillips, WR Starkey Mortgage

8.24.11

Yesterday, we noted pressure building on BestExecution rates. Today, things boiled over unfavorably and the loan pricing losing streak extended into a fourth day. Mortgage Rates got hit hard enough that yesterday's quotes may not even be available today without additional closing costs.

Our ongoing guidance recently has been to take advantage of recent rate offerings as soon as possible, noting that "the frustration of missing out on "high 3's" and instead getting "low 4's" seems nowhere near as bad as the frustration of missing out on a real estate in huntsville refi opportunity (moving from 5% to 4.25% for instance) altogether." That turns out to be pretty prophetic as you'll be lucky to see BestExecution at 4.25% today.

CURRENT MARKET*: The Best Execution 30-year fixed mortgage rate is now 4.25% to 4.375% depending on your lender/scenario. Several lenders are still willing to offer lower rates, but those quotes carry with them additional closing costs. On FHA/VA 30 year fixed Best Execution rose from what had been a solid 4.0% to 4.25% today. Deals can be structured with lower rates, but again, you'll pay more for those, so make sure you assess the time it takes to break-even on the extra expense. 15 year fixed conventional loans are best priced at 3.625%. Five year ARMs are still best priced at 3.25. ARMs seem to have bottomed out.

A note on the greater-than-normal variation in rate offerings between lenders. There is an increased amount of variety in what individual lenders are now quoting as their BestExecution 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. Additionally, the recent rates rally makes lenders busy enough that some control their inbound volume by raising rates regardless of the secondary mortgage market in order to discourage new applications/locks.