The graph at right shows the path of mortgage rates in May. The rate run-up continued yesterday. After a fairly tame start, yesterday's action rapidly slipped away from mortgage rate shoppers beginning at 12:00 P.M. ET.
Many lenders responded by invoking their right to a mid-day reprice as well, with some adding as much as 0.25% to their prices.
A mid-day reprice signals rapid changes in mortgage market conditions. They don't happen everyday, but on days like yesterday when the market deteriorates as quickly as it did, lenders don't like the idea of offering interest rates that are "below market" rate.
When you consider that we're talking about banks, this is a concept that's fairly easy to grasp.
Unfortunately, though, when markets take the opposite course and improve rapidly, lenders are not so quick to mid-day reprice; they'll usually opt to just wait to embed the changes in the next morning's rate sheets.
Again, when you consider that we're talking about banks, this is a concept that's fairly easy to grasp.
It's the old adage: mortgage rates take the elevator up, but take the stairs down.
If you received rate quotes yesterday morning and did not lock, be sure to check back in today -- your quoted rate will be higher.
(Image source: Bankrate.com)
