Mortgage rates held their ground at 8-month lows today.  This time around, it was far less eventful than yesterday's session, which saw lenders changes rates several times throughout the day (and in opposite directions to boot!). Some lenders are in just slightly better shape vs their own rate sheets from yesterday while others are a little higher.  On average, the most prevalently-quoted conventional 30yr fixed quote is unchanged at 3.75% with 3.625% remaining a close runner-up.

The absence of volatility and drama in the realm of mortgage rates is indicative of the general absence of drama in financial markets.  Both oil and stocks (2 of the biggest sources of inspiration for bond markets and mortgage rates) ended the day very close to unchanged.  All of the above is consistent with investors playing it safe ahead of tomorrow morning's Employment Situation (aka "jobs report," "nonfarm payrolls," or NFP).  This is the biggest piece of economic data each month and it always has the potential to send rates in either direction in a big way.

Loan Originator Perspective

"Bond and equity markets took a breather today, with neither changing much on the eve of January's NFP report.  10 year treasury yields once again stayed near recent lows, but had no motivation to drop further.  My pricing today is as good as I've seen for months, pipeline is locked with the exception of some closings over 30 days out.  If NFP numbers are robust, we could lose our recent gains in a heartbeat.  I see no reason to float for borrowers nearing closing" -Ted Rood, Senior Originator

"Bonds have been able to hold onto much of the recent gains they have enjoyed.  With non farm payrolls coming out tomorrow morning before rate sheets hit, I definitely think it would be prudent to lock in today.  Yes, rates could rally tomorrow, but there is much room to rally but there is a lot of room for rates to rise.   And rates always rise faster than they fall." -Victor Burek, Churchill Mortgage

"The market will see its second jobs report of 2016 tomorrow.  This will certainly impact trading and does have the potential to end downward trending mortgage rates.  If you are happy with your rate go ahead and lock in.   The down trend can only last so long and you do not want to lock after the trend turns a corner." -Manny Gomes, Vice President of Mortgage Lending

Today's Best-Execution Rates

  • 30YR FIXED - 3.625 - 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).