Mortgage rates rose again today--this time more noticeably than yesterday--bringing them to the highest levels in more than 2 weeks. For most, however, that sounds a lot worse than it actually is. In fact, the interest rate at the top of a loan quote has a good chance of being the exact same as the any other time during the past 2 weeks. How does that work?!
The catch is that the "note rate" (the one that is applied to the principal balance to determine monthly payments--the only rate most people talk or care about, generally) is only part of the equation. There are also upfront costs associated with any given rate. Those costs allow for finer adjustments. Those adjustments technically affect the "effective rate." So while the interest rate might be unchanged in many cases, the cost of the mortgage has nonetheless risen.
Loan Originator Perspective
Bonds took a step back today following a robust consumer confidence report. While rates didn't move abruptly, the last two days' losses illustrate why floating now is risky. There's just not enough potential gain to offset the risk, in my eyes. I'm locking new applications closing within 30 days. -Ted Rood, Senior Originator
Bonds continue their move to higher yields. My clients are favoring locking in once within 30 days of closing. Bonds have proven time and time again they do not want to go lower than 2.82ish on the 10yr. With that solid floor below, there is very little benefit in floating. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
Ongoing Lock/Float Considerations