Mortgage Rates continue to operate near 5-month highs, after putting in a mixed performance today.  The morning was especially bad as stronger global economic data pushed US bond markets to their weakest recent levels (weak bonds = high rates).  The tense market environment surrounding the presidential election worked in rates' favor in the afternoon.  Headlines broke regarding new documents being posted by the FBI regarding a 2001 probe of the Clinton Foundation.  Although the details and rationale were sketchy, the news logically benefits Trump to an undetermined extent.  Because markets generally associate Trump with greater uncertainty, and because uncertainty motivates bond buying, bonds improved rapidly into the afternoon.  Most lenders issued positive reprices, bringing rates back in line with Friday's rates.

Despite the drama, and the fact that rates are legitimately at their highest levels in 5 months, it's good to remember that the last 5 months have been some of the best in the history of mortgage lending.  3.625% is still the going rate on top tier conventional loans, and there are still quite a few lenders quoting 3.5%.  Yes, there is a risk that the current trend toward higher rates will continue, but it wouldn't be until the early December central bank announcements (European Central Bank and the Fed) that things could really kick into high gear, for better or worse.

Tomorrow brings the 2nd-to-last Fed announcement of the year.  Some traders expect the Fed to telegraph a hike coming up in December.  The absence of such clues could be the thing that helps mortgage rates stage a small recovery, but that's not the sort of hope that should dissuade the average borrower from leaning toward locking vs floating. 

Loan Originator Perspective

Rate markets continued to mark time today, as Wednesday's Fed announcement and Friday's NFP jobs report loom.  We typically don't see much motivation for pricing to improve on NFP week, and I'd be shocked if tomorrow's Fed announcement provided any.  In fact, it may be more non-committal than most Fed statements, which is saying quite a bit.  My pipeline is locked, and until I see sufficient drama or economic angst to change the trend of rising rates, I'll keep locking sooner rather than later. -Ted Rood, Senior Originator

The overall trend is not our friend currently which would suggest that locking is the way to go.   I do not see any benefit in floating right now.   Until this trend is broken, locking is the wise move.   Only loans I would  consider floating would be ones that you can float overnight and lock tomorrow on a shorter term. -Victor Burek, Churchill Mortgage

Today's Best-Execution Rates

  • 30YR FIXED - 3.625%
  • FHA/VA - 3.25-3.5%
  • 15 YEAR FIXED - 2.875%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates have generally been trending higher since hitting all-time lows in early July
  • Clearly-defined uptrends provide higher-than-average motivation to lock

  • Risk-takers can try to time the dips in rates that may occur during that broader uptrend, but the reward for good timing generally isn't worth the risk in these situations.
  • We'd need to see a sustained push back toward lower rates (something that lasts more than 1-3 days) before anything less than a cautious, lock-biased approach makes sense for all but the most risk-tolerant borrowers. 
  • 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).