Mortgage rates only paused for a brief moment of reflection yesterday before continuing with 2016's trend of improvement.  Today's gains bring them easily back to new 8-month lows.  Last Friday, that's a designation they shared with a few days in October.  Today's rates don't need need to talk about sharing the trophy until we get all the way back to April 2015.  The average lender is now easily down to conventional 30yr fixed rates of 3.75%.  The stronger lenders have gradually been moving down to 3.625%.

Rates continue taking cues from global financial market turmoil where stocks and oil prices lost quite a bit of ground.  There is also the matter of foreign central bank policies, with the second and third largest central banks (Europe and Japan) both conducting monetary policy in such a way that benefits US interest rates.  The long term trend toward lower rates remains intact, and it will take several days of substantially higher rates to call that into question.

Loan Originator Perspective

"Another nice day for rates.   After yesterday's small sell off, rates have rallied regaining all of yesterday's losses.   With non farm payrolls right around the corner, I do think rates will come under pressure to rise ahead of the data.  If your lender has repriced for the better today, you should strongly consider locking in the gains.  If your lender does not reprice for the better, floating until tomorrow is worth the risk in my opinion." -Victor Burek, Churchill Mortgage

Today's Best-Execution Rates

  • 30YR FIXED - 3.75
  • FHA/VA - 3.5%
  • 15 YEAR FIXED - 3.125
  • 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 came into the new year in distress.  Major stock indices are plummeted around the world, and investors sought shelter in the bond market.  When investor demand for bonds increases, rates fall.

  • So we're left with much lower mortgage rates despite the Fed having just begun its hiking cycle.  This paradoxical trend can continue as long as global market turmoil fuels a demand for safer haven investments.  A big bounce in oil/stock prices could mean trouble for rates--at least temporarily.

  • 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).