Mortgage rates fell just slightly today, though this wasn’t the case for every lender. Rate quotes are likely to be at the same note rate as yesterday’s, but with slightly lower borrowing costs on average.
On any given day, one or two rates are going to make “more sense” than others in terms of payment and closing costs. For any given scenario, if you use a “no point / no origination” quote as your baseline, you would assess whether or not it made sense to move to a lower rate based on how much the closing costs increased.
Deciding what makes more sense is largely a factor of personal preference, but borrowers are generally more interested in moving to lower rates when it will take less than 5 years (roughly) to break even on the extra expense.
Today’s Best-Execution Rates
30YR FIXED – 4.0%
FHA/VA – 4.25%-3.75%
15 YEAR FIXED – 3.0%
5 year ARM – 2.625%
Uncertainty over the Fed’s bond-buying plans and Fiscal Policy has been making for a tough interest rate environment where we’re not seeing sustained improvement unless it’s a correction to even bigger deterioration.
The Fed’s bond buying is the key consideration–not just the initial reduction (aka “tapering”), but the general pace of withdrawal. We’ve gone from tapering being a “sure thing” in September, to it being on hold until March 2014, and now December 2013 is increasingly possible after the most recent Employment report on Nov 8th.
Markets continue to be most interested in economic data and its suggestions about the longer term trajectory of the economy. This will shape expectations for Fed policy in the coming months, and thus inform the direction of interest rates.
The stronger the data the more likely the Fed is seen as reducing asset purchases. Rates would rise under this scenario, but the Fed indicated its cognizance of high rates creating headwinds for the recovery, and this suggests they’ll attempt to keep the pace of rising rates moderate as long as inflation isn’t adversely affected.
(As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario. There are many reasons a quoted rate may differ from our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).