Mortgage rates caught a break today, moving lower for the first time this week and pushing back from the highest levels since early July 2017. Like yesterday, strong demand at a Treasury auction helped US bond markets, but notably, only the longer-term maturities (10yr and 30yr bonds were the big winners). Fortunately, the bonds that underlie mortgage rates tend to correlate well with longer-term Treasuries.
Economic data also played a role with a weaker reading on inflation at the producer level. Tomorrow brings the much more important reading on consumer-level inflation (via the Consumer Price Index or CPI). If CPI is similarly weak, it could steel the resolve on the part of rates to hold to recent ceilings–potentially providing a base of operations for borrowers to consider a strategy other than locking early in the loan process.
Loan Originator Perspectives
Bond markets caught a bit of a break today, as a robust 30 year treasury auction helped quell recent losses. It’s a start, but hardly evidence of a looming rally. I’ll continue locking early, until “possible” rally looks more like “probable” rally. –Ted Rood, Senior Originator
Bonds are having a nice day today. Tomorrow we do get consumer inflation. If inflation is less than thought, i think this rally can extend further. Todays producer prices were weaker, so i am hopeful we get the same report tomorrow on consumer prices. I like floating overnight here. If you do want to lock, wait until as late as possible to allow your lender time to reprice for the better. –Victor Burek, Churchill Mortgage
Today’s Most Prevalent Rates
- 30YR FIXED – 4.125%
- FHA/VA – 3.75%
- 15 YEAR FIXED – 3.375%-3.5%
- 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 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.