No, mortgage rates have certainly not returned to their historic lows!
It’s Thursday and so time, again, for Freddie Mac’s weekly mortgage rate survey. News agencies and even some bond market strategists are (unfortunately) relying on Freddie’s weekly update to get a feel for where mortgage rates are going. This is why a overwhelming majority new articles on mortgage rates for a given week come out on Thursdays.
Unfortunately, the unified assault on media coverage adds unwarranted credibility to what is outdated information at best. This creates uncomfortable conversations for loan originators and their clients asking why their recently quoted rate isn’t lower. After all, rates today are at their lowest, aren’t they ?!
And it’s do not just a half-hearted “bad” because of tricky technicality or math. Today’s rates are truly and unequivocal not even close to those seen on August 4th or so. Are they low? Sure! Are they less than 3% for higher level scenarios? Absolutely. But while the going rate today for senior clients at aggressively priced lenders is below 2.9, it was easily below 2.8 in early August. More important, maybe MOST important when we talk about the change from week to week – the average lender cited HIGHER rates compared to last week.
How does Freddie get it so wrong? Looking at this week versus last, the answer is Easy. Freddie’s survey primarily reflects mortgage rates on Mondays and Tuesdays. Last week’s best rates only reached Wednesday and Thursday.
As for the difference between this week’s figures and those observed in early August, it is to be guessed. Here’s mine: Freddie’s investigation is sent to a wide variety of authors. A sufficiently large proportion of respondents must belong to the cohort of initiators who are slow to change rates with the rest of the market. These initiators can really quote lower rates today compared to the beginning of August, but they are the exception to the rule.
Bottom line, the average lender has slightly higher rates today compared to last week, and obviously higher rates compared to early August.