According to Mortgage News Daily, Kansas City mortgage rates remain aggressive.
Home loan borrowing costs are still hovering near six-month lows but forward progress continues to be challenging. We’ve described the recent behavior of mortgage rates as “sideways” after running into “The Wall”. This was the case once again today as there is no change to report in borrowing costs. Take a look at THIS CHART for a visual of how rates have hit “The Wall.”
CURRENT MARKET: The “Best Execution” conventional 30-year fixed mortgage rate remains a state of flux between 4.75% and 4.625%. Several lenders are currently quoting C30 loans at 4.625% with no origination points (see disclaimer below). If you are looking to move down from there, you’ll be assessing the trade-offs between higher closing costs and lower monthly payments. This could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs. On FHA/VA 30 year fixed “Best Execution” is also a moving target roughly centered on 4.375% with adjacent rates (even 4.25%) being logical in some scenarios. 4.50% is a no-brainer for most FHA 30yr fixed scenarios. 15 year fixed conventional loans are best priced at 3.875%. Five year ARMs are best priced at 3.25% but the ARM market is more stratified and there is more variation in what will be “Best-Execution” depending on your individual scenario.
PREVIOUS GUIDANCE: The rally has gone sideways, that skews risk unfavorably in the short term. This will continue to be the case until “The Wall” comes tumbling down or proves unbreakable. Borrowers with a 10-15 day lock/float timeline should be defensive of recent cost improvements, especially if lenders are quoting rates in the lower-side of our “Current Market” Best-Ex listing. Floating is still an option for borrowers who have a longer lock/float timeline as well intermediate-term scenarios. Stay tuned for further developments.
CURRENT GUIDANCE: There is still justification for floating if you have an intermediate to long-term scenario or a more aggressive/flexible stance and don’t mind locking later, at a loss if “The Wall” proves unbreakable. But for short termers, the very existence of “The Wall” suggests locking is the smart decision, especially if you’re on a 10-15 day timeline or are less flexible with respect to changes in closing costs or note rate. Additionally, if you’re being quoted the lower of the two Best Execution rates mentioned above in the “current market” section, floating is even more risky as those rates can vanish in one bad day, whereas it would take several days of uncommonly good performance in bond markets to get you down to the next rung on the mortgage rate ladder.
What MUST be considered BEFORE one thinks about capitalizing on a rates rally?
1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?