So how is it that we’re still seeing claims of all-time low rates? The first source of distortion is Freddie Mac’s focus on “the best” rate which, in the current case, will be for purchase mortgages due to the new refinance fee mandated by Fannie and Freddie for a vast majority of conventional refinances. It increased rates on the average refi by an average of .25% depending on the lender. Most lenders began including it in loan quotes by the end of September.
MBA’s data paints a similar picture though, and it includes refi data. The difference is that MBA is capturing vastly more input than Freddie (up to 75% of all loans according to their methodology). On the first full week of August, their average rate should absolutely be higher than the rates that were only available for a few hours on August 4th. Given that rates are now doing a better job of remaining low with less volatility on any given week, it’s actually no surprise to see “all-time lows” continue to make the headlines.
Bottom line: The best rates ever happened on August 4th. Some weekly survey data suggests otherwise because it focuses on purchases and is limited in scope. Other survey data suggests otherwise because it is intentionally broad, thus capturing too much of the activity in any given week for August 4th’s lows to stand out. And all of the above is splitting hairs! Whether we’re technically at all-time low rates or not, we might as well be–especially for purchases.
Reminder: New conforming loan limits are expected next Tuesday. For a full discussion on that, see last week’s newsletter.
Bonus Charts: Stocks yawn at Moderna’s vaccine news after Pfizer caused a big move last week. Similar story for bonds, with 10yr yields consolidating in a narrower, lower pattern since the Pfizer news.