Mortgage rates moved slightly lower today, recovering some of Friday's losses.  Those losses introduced the risk that 2016's dominant trend toward lower rates could be in the early stages of turning a corner.  Today's improvements don't necessarily confirm or reject that possibility.  It continues to be the case that we may be waiting until Thursday before getting a clearer sense of any potential big-picture changes.    3.875% remains the most prevalently-quoted conventional 30yr fixed rate for top tier scenarios, but today's gains mean 3.75% is the next most prevalent rate instead of 4.0%.

Much like the rest of the year, today's market movements were mainly a factor of losses in oil and stock markets.  Mortgage rates don't always follow the prices of those riskier assets, but they certainly have been for the past 4 weeks.  Any major move higher or lower in oil/stock prices will likely be met with a similar move in mortgage rates.

Loan Originator Perspective

"Bonds logged small gains today, as equities continued their slide on fears of contracting global economies.  Who knows where oil may end up, but the lower it goes, the greater the chances of continued low rates.  If treasuries could break (and stay below) 2.0% yield, I'd feel better about this rally's staying power, so for now, I am lock neutral.  Absolutely nothing wrong with grabbing current pricing and taking risk off the table, but I wouldn't dissuade a well informed borrower from floating, either." -Ted Rood, Senior Originator

"Mortgage rates improved slightly today as the Equity market had another down day.   I am in the camp which believes rates are vulnerable to a temporary move higher.  There will be more clarity after the Fed meeting but until then I would be locking in." -Manny Gomes, Branch Manager, Norcom Mortgage

Today's Best-Execution Rates

  • 30YR FIXED - 3.875%
  • FHA/VA - 3.5%
  • 15 YEAR FIXED - 3.125-3.25%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • The Fed finally hiked on December 16th.  The baseline implication would be steady pressure toward higher interest rates, but there's been "a catch" so far in 2016
  • Global financial markets have come into the new year in distress.  Major stock indices are plummeting around the world, and investors are seeking shelter in the bond market.  When investor demand for bonds increases, rates fall.

  • So we're left with a move toward the lowest mortgage rates in 7 months despite the Fed having just begun its hiking cycle.  This paradoxical trend can continue as long as global risk markets continue selling-off.  The big risk is for a big bounce if global risk markets happen to find their footing. 

  • As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.'  Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy.  It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).