Lacking direction, mortgage rates showed little movement prior to the U.S. employment report’s release this morning. However, after absorbing the disappointing report of the economy adding only 38,000 jobs, lenders were already making minor adjustments to their rates — mostly lower.
A NerdWallet survey of mortgage lenders reflects the daily change in average mortgage rates:
Mortgage Rates: June 3, 2016
(Change from 6/2)
30-year fixed: 3.78% APR (-0.02)
15-year fixed: 3.16% APR (-0.01)
5/1 ARM: 3.46% APR (-0.01)
“The jobs report today was a huge miss, and mortgage rates are right back to their multiyear lows,” Todd Huettner, president of Huettner Capital in Denver, tells NerdWallet. “We are now back at significant support, and it will take more than belief the Fed is not going to raise rates for the next several months to go below where we are now.”
Huettner says mortgage rates have been bouncing back and forth in a narrowing trading range and it is far more likely rates will eventually break out of this tight range — and head higher rather than lower.
“There is just no reason for rates to go lower unless we were to see really bad economic data from Europe and/or China,” Huettner says. “The Fed would have to cut rates back to zero and announce more monetary stimulus to get rates lower than they are now.”
Lock or float your mortgage rate?
Huettner’s Golden Rule: Lock as soon as you have a scenario that works for you. Additionally, if your lender offers a “float down,” you can ride rates down as they move lower, but you are protected if rates rise.
“Gambling on rates by trying to time the market usually ends in disappointment,” Huettner adds. And he notes, if you couldn’t buy your home if rates were to go up, you had better lock right away.
“Best-case scenario, rates go down a tiny bit, but worst-case scenario, rates go up a quarter or more in a few days,” he says. “Rates are at the low end of the two-week and four-month trading range, so I think it would be a great time to lock if you are floating a loan now.”
As always, any decision to lock a mortgage rate should be based on the borrowers’ risk tolerance and their short- and long-term goals.
NerdWallet daily mortgage rates are an average of the lowest published APR for each loan term offered by a sampling of major national lenders. Annual percentage rate quotes reflect an interest rate plus points, fees and other expenses, providing a more accurate view of the costs a borrower might pay.
Hal Bundrick is a staff writer at NerdWallet, a personal finance website. Email: hal@nerdwallet.com. Twitter: @halmbundrick.
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