Mortgage Rates Mixed as Lenders Look to Buy

 

Mortgage rates generally held steady amidst a shifting investing environment. Some lenders improved mortgage rates while others moved consumer borrowing costs higher.

It may seem odd that two lenders would push mortgage rates in different directions on the same day but it's actually very common. There are several factors that go into the determination of mortgage rates besides the ups and downs of mortgage-backed securities prices.

One example of why two similar-sized lenders would be offering different base mortgage rates (before Loan Level Price Adjustments) is the amount of new loan applications they have taken in over the past month.

If a lender is operating near full capacity, they can slow down production by worsening their loan pricing. The opposite strategy can be employed if a lender wanted to increase loan production. This happens from time to time and is hard to identify unless you have spreadsheets that track loan pricing on a daily basis.

This mixed behavior carried over into rate sheets. Some lenders improved borrowing costs while others pushed closing costs higher. The lenders who improved borrowing costs are attempting to buy the market, which makes sense given current market conditions.

Stock sentiment is improving and benchmark Treasury yields have risen out of economic "double dip" territory. This has led mortgage-backed security prices lower and put pressure on mortgage rates to rise.

– Courtesy of Mortgage News Daily