Mortgage rates touched lower at a decent pace today for the 2nd day in a row. The average lender still offers the same “note rate” as yesterday, but the cost associated with that rate is lower. In other words, the “effective interest rates” (a synthetic interest rate that takes into account changes in up-front costs and allows us to observe smaller daily changes in the form of an interest rate) are lower.
Why differentiate between effective interest rates and note rates? Simply put, write down the prices Not tend to move enough to be tracked each day (most lenders offer interest rates in 0.125% increments). In more stable market conditions, we can work for weeks or even months at the same time without changing the note rates. However, the effective rates are almost always at least 0.01% higher or lower.
So Where is that for us? and where do we go from here?
There are good and bad news on that front. The good news is that today’s prices are their lowest in about a week. The bad news is that at the time these were the highest rates in about a year and were still well above the lows earlier this year (0.5% in many cases).
Whether or not this is the beginning of a major reversal remains to be seen. We have had several such promising episodes en route to higher rates and all of them have been “traps” so far. At some point, one of these bounces will be the real deal (and in fact, the higher the rates the more likely it is), but we will waiting for at least a few days of confirmation before getting too committed to the idea.