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Mortgage Rates Jump To Highest Levels Of The Year
Feb 13 2013, 4:13PM

Mortgage rates surged higher at their quickest pace since late January on Wednesday eclipsing the previous highs of the year seen around the same time.

For many lenders--and for the first time since mid 2012, this takes Best-Execution for 30yr Fixed, Conventional Loans back up to 3.75%. Some lenders remain at 3.625% and lower rates are still quite viable in certain situations. As always, remember that what we refer to as "best-execution" can vary depending on personal preferences. Also, it's important to remember (when we're talking about Best-Ex being at different levels between lenders) that it doesn't necessarily mean the lender with the lower best-ex is better priced than another--simply that the their adjacent rate offerings (usually .125% higher and lower) are not as efficient in terms of borrowing cost vs payment.

Treasury yields aren't any higher today than they have been at their worst levels of the year, but they're close. This "closeness" is disconcerting for the mortgage rate market and the MBS (mortgage-backed-securities) that serve as its foundation. MBS are separated by 0.5% increments with roughly a 0.5% range of many loans being "eligible" to become part of a particular security. Recently, the Fannie Mae 3.0% Coupon (which is comprised mainly of newly originated loans of 3.25% to 3.75%) has been the king of the hill in terms of MBS market activity.

The prices of the 3.0 coupon MBS crossed into a new low today, and one that they HAD BEEN doing a decent job of holding, despite recent weakness. That sort of "breaking of the floor" can coincide with an extra bit of momentum lower in prices, especially if interest rate benchmarks like Treasuries are under pressure as well. Bottom line, investors are as concerned as they have been about the LONG stay at the 3.0 party potentially shifting toward the 3.5 party. Accordingly, lenders rates are as high as they've been since 3.0s began dominating the party scene.

 

Special credit to Jaques Poujade for the info-

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