Mortgage rates fell today, bringing them back in line with the lowest levels in more than 2 months and very near the best levels since late April 2015. The surprisingly strong performance so far in 2016 is primarily due to a much weaker performance in risk assets like stocks and oil prices. As investors sell stocks and oil, they are buying safer-haven assets like Treasuries and mortgage-backed-securities (MBS), which have much less price volatility than stocks. When investor demand increases for MBS, mortgage rates fall.
The average lender is easily back into the “high 3’s” when it comes to conventional 30yr fixed quotes for top tier scenarios. The only question is whether that means 3.75% or 3.875%. With today’s improvements, quite a few lenders moved back down to to 3.75%. They don’t necessarily represent a majority just yet, but it’s getting to be a closer call.
Naturally, everyone wants to know if rates can continue to fall. Everyone wanted to know this last week as well. Clearly, rates can continue to fall, but no one knows for sure if they will. Lock if you like the rate you’re looking at. If you hold out for further improvements, set yourself a limit as to how much you’d be willing to lose before being forced to lock and make the necessary game-plan with your loan officer.