Mortgage rates were lower today for the average lender, but just how low remains a matter of great debate. To be fair, there’s no active debate raging behind the scenes. Rather, there are a few weeks’ worth of news headlines claiming “all-time low mortgage rates,” and then there is the objective truth (which is a bit different from those news headlines).
We’ve talked about the discrepancy quite a bit recently (here is the most recent and most thorough discussion). It has to do with 2 shortcomings of popular rate surveys: stale/limited data and a “purchase-only” focus.
Stale data can cause problems, but it shouldn‘t result in 2 consecutive weeks of erroneous conclusions about all-time low rates. One caveat here is that the recently noted all-time lows aren’t much lower than the previous instances in early August and early September. The “purchase-only” focus is causing an even bigger issue currently, because purchase rates are somewhat to significantly lower than refi rates, depending on the lender.
What’s the bottom line here? If you’re looking at current purchase rates versus those available in early August or September, you should be seeing something fairly close to all-time lows (depending on the lender). In terms of refinance rates, while today’s are certainly a bit better than Friday’s, they’re still nowhere near Aug/Sept’s installments of all-time lows.
What kind of difference are we talking about here? First off, compared to Friday, the average lender is still offering the same NOTE rates, but will slightly lower upfront costs (i.e. lower effective rate). That’s true for both purchases and refis. Compared to previous all-time lows in Sept/Aug, purchase rates are still about 0.125% higher at minimum, and refi rates are anywhere from .25-0.50% higher.