VA borrowers looking for new purchase mortgages or refinancing loans had quite a rough time last week as rates started off last Monday trying to improve and recover, rolling into a second day of improvement on Tuesday. That two-day turn seemed to be a good sign as it broke an on-again, off-again chain of improvements and retreats. But Wednesday brought the highest rate climb in some time, making some wonder if the rates weren’t headed into new higher territory as “the new normal”.
Why are we looking back to last week’s performance? Markets are closed today for the Presidents Day holiday so there will be no trends to report until Tuesday. But it pays to take a look backward at the previous week in preparation for rate ups and downs in the days to come. Last week’s high rates on Wednesday were followed by a slight recovery on Thursday with Friday activity reported as “unchanged or slightly higher” depending on the lender. A lot of borrowers will have noticed higher closing costs rather than higher rates, others may have experienced both higher costs and available rates slightly higher depending on the lender.
In all of this, VA mortgage loan rates did not budge out of their best-execution range between 3.25% and 3.5%. Again, closing costs may rise and fall with VA mortgage loans and refinance loans depending on market conditions, but in our reporting experience it seems that VA rates don’t swing out of the “comfort zone” unless there has been a substantial amount of upward pressure on the rates. Conventional rates may change more frequently than the reported best-execution VA loan rates.
But that phrase “best execution” is one to pay close attention to; best execution rates (those reported here) assume ideal conditions--they should be used by most borrowers as a starting place. Not all lenders offer these rates, not all borrowers qualify for them. But if you know what rates are available to you and compare them to best execution rates you may be able to get an idea watching market activity what you can expect when you do commit to a loan. Could closing costs be higher or lower today if there was a “bad news day” for markets but no actual increase in interest rates? Knowing how to “read” the day’s market activity in this way will help you better understand what you can expect when it’s time to commit.
We return to our market rate reporting tomorrow when markets resume trading after the three-day weekend.