Mortgage rates moved slightly lower today, despite movement in bond markets that would have suggested otherwise. The paradoxical strength is likely due to the fact that bonds improved faster yesterday without mortgage lenders adjusting rate sheets accordingly. In other words, we began the day with an advantage thanks to lenders being overly cautious yesterday. From here we could even see a few lenders adjust rate sheets for the better as bonds have managed to find their footing at the end of the day.
To put this talk of “improved rates” in context, many prospective borrowers would not see any difference between today’s loan quotes and yesterday’s. Some lenders didn’t make any changes. Others merely offered modest reductions in upfront costs. It’s only when we look at the average lender and consider those upfront costs to be part of the “effective rate” that we can say mortgage rates are lower today. For anyone looking longer-term and bigger-picture, rates have been effectively sideways for nearly 3 months.
Loan Originator Perspective
Bond and equity markets continued their waiting games today as tax reform details trickled out. Although MBS sold off this morning, my pricing was actually slightly better than yesterday’s. At any rate (pun intended), I’ll keep locking early for now, at least on loans within 30 days of closing. Happy weekend, all. -Ted Rood, Senior Originator
Today’s Most Prevalent Rates
- 30YR FIXED – 4.0%
- FHA/VA – 3.75%
- 15 YEAR FIXED – 3.375%
- 5 YEAR ARMS – 2.75 – 3.25% depending on the lender
Ongoing Lock/Float Considerations
- 2017 had proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016.
- While rates remain low in absolute terms, they’ve moved higher in a more threatening way heading into the 4th quarter, relative to the stability and improvement seen earlier in 2017
- The default stance for now is that this trend toward higher rates has the potential to continue. It will take more than a few great days here and there for that outlook to change.
- For weeks, this bullet point had warned about recent stability inviting a bigger dose of volatility. That volatility is now here. As such, locking is generally the better choice until the volatility is clearly dying down.
- Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders. The rates generally assume little-to-no origination or discount except as noted when applicable. Rates appearing on this page are “effective rates” that take day-to-day changes in upfront costs into consideration.