Mortgage Rates Still Working on That Ceiling


Mortgage rates didn’t move much today.  Most lenders were just slightly lower/better this morning, but mid-day market weakness prompted several of them to reissue higher rates.  In the bigger picture, however, the past several days represent a welcome stint of relative calm.  The general trend had been toward higher rates beginning in mid-December.

Granted, that general trend could continue and the past few business days could merely be a pause.  But the point is, whether it’s a pause or the beginning of a reversal, either would begin the same way.  The important development in underlying bond markets has been resilience at the weaker (read: higher rate) levels.  Using 10yr Treasury yields as a benchmark for rate in general, we’d want 2.60% to continue to act as a ceiling.

The ingredient we’re still missing is the move below an important floor.  In the current case, 2.52% would be a good first step.  A move to 2.42% would likely correspond with top tier 30yr fixed mortgage rates returning to 4.0% on average.

Loan Originator Perspectives

Bond markets idled today as stocks reached yet more record highs.  I have to wonder what rates would/will do if/when stocks ever regress, but not banking on that happening soon.  There’s limited pertinent data the rest of the week, I doubt we’ll see any huge pricing swings.  A few lenders have repriced worse in the last 30 minutes, I’ll continue locking early. Ted Rood, Senior Originator

Going into the close, bonds are rallying off the highs of the day thanks to stocks moving lower.   A few lenders did reprice for the worse.  If your lender was one of the few to reprice worse, i would definitely float overnight.   If not, then its a toss up.   If you can tolerate the risk, i would roll the dice overnight and see if we can break through resistance at 2.52 on the 10 year tomorrow.  –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.

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