Mortgage rates finally lost less ground than they have over the past few business days. The problem is that this still left room for rates to go higher at a much faster pace than normal.
Some borrowers will have seen their quoted rate move up another eighth to a quarter, depending on the lender. After rising to 4.625% on Friday, Conventional 30yr Fixed best-execution is currently between there and 4.75%. Lenders continue to offer lower rates in exchange for increased upfront costs, but those rates have deteriorated (meaning costs have increased) significantly faster than rates in the best-execution zone.
As we often say, “volatility” is unkind to mortgage rate sheets. The wider the range of potential outcomes lenders are forced to defend against, the less aggressive they can afford to be with rates, regardless of whether or not today’s rates improved. In other words, an awesome day for mortgage rates is made less awesome by volatility, and a bad day is made extra bad.
In that sense, current rate levels are a product of a double whammy between current trading levels and the need to account for volatility. As of now, volatility should be assumed to be expanding or steady at high levels until we have clear reason to believe it’s receding, and we’re not there yet.
This continues to be one of, if not THE most significant move in the modern history of mortgage rates (in terms of the pace of change).
“The volatility in mortgage rates has been unprecedented. Daily swings cause changes intraday and unfortunately that creates distortion for consumers.
The recent volatility will not subside until the free market determines where the real bid/ask is minus the FED. Until that point expect the swings to continue. 30-45 days should be locking. Longer term may be able to float, however we do not recommend it with the current environment.
We went from low 3’s to high 4’s in a couple of weeks, and this morning we were possibly talking 5’s. The day is not over and the week just begun. ” –Constantine Floropoulos, Quontic Bank