Last Thursday was that best day for Mortgage rates in more than a month, and while they got back on their feet Thursday afternoon, they have fallen modestly since then. Yesterday we approached the lows from last Thursday. Today helped us bring them together. That means today’s rates will be the lowest in exactly 7 weeks. You would have to return by March 2nd or 3rd (depending on the lender) to see something lower.
How were the swings at that time? Not actually insignificant! The average conventional 30-year fixed rate rose 0.25% in March and fell so much in April. Please note, however, that things can vary greatly depending on the specifics of your scenario and the rate itself. Due to the structure of the bond market that underlies mortgage rates, the lender’s compensation will NOT change linearly as interest rates rise and fall.
For example, the difference in upfront cost (or lender compensation) between 3.00% and 3.125% interest rates is approximately half a point ($ 500 for every USD 100,000 credit balance). The cost gap jumps to 0.8 points if it is between 2.875 and 2.75%. In other words, the lower your rate was initially, the less likely you are to see all of that 0.25% decline since March 31st.
In terms of strategy, we definitely have leave the unstoppable negative trend that dominated the first three months of the year. The current, less volatile environment can last for days, weeks or even months. The longer it takes, the wider the range would be. On the flip side, it’s just as valid to see the last 4 weeks as a much-needed break in a drama that will continue through the end of 2021. Conclusion: more space for hope at this point, but still no room for complacency.