Mortgage Rates Move Off Record Lows as Rally Exhausts

Mortgage rates rallied to new all-time lows yesterday following a few disappointing housing headlines. While it has been no secret to housing industry professionals, the post-homebuyer tax credit hangover appears to have caught some folks on Wall Street off-guard. Stocks sold off, interest rates rallied and lender rate sheets were the most aggressive we've ever seen them. I locked all the loans in my pipeline.


We've had a great run over the past few days. MBS prices hit new all-time highs yesterday. Loan pricing was the most aggressive we've ever seen it. Lenders were practically begging for borrowers to lock their loans. Unfortunately the rally lost some steam today. Nothing seems to have caused it, but lenders repriced for the worse and mortgage rates increased this afternoon. I think the best way to describe the move higher is "rally exhaustion". Prices were just too high and profits were taken.

Reports from fellow mortgage professionals indicate lender rate sheets to be worse than yesterday after lenders repriced for the worse today. Higher mortgage borrowing costs will most noticeable via an increase in discount points. The par 30 year conventional rate mortgage remains in the 4.375% to 4.625% range for well qualified consumers. To secure a par interest rate on a conventional mortgage you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee. If you plan to stay in your home for less than 3 years, you should consider a no cost refinance which offers a rate of around 4.875% today. You pay no upfront fees and no fees are rolled into the mortgage. The loan originator pays your closing costs for you by giving you a higher interest rate which pays the loan originator on the back side.

Mortgage rates are ridiculously aggressive right now. I favor locking all loans.