Mortgage rates were mixed today, depending on the lender.  Those who raised rates yesterday afternoon were more likely to show small day-over-day improvements today.  But for the average lender, rates edged just slightly higher, bringing them to the highest levels of 2016 (matching the rates seen on January 4th and 5th).  Bond markets improved today, which typically allows lenders to offer lower rates, but lenders are understandably hesitant to pass along market gains without seeing some more stability.

One week ago, the most prevalent conventional 30yr fixed rate was 3.625% for top tier scenarios.   That makes this one of the worst weeks for mortgage rates on record.  Today was more of an afterthought compared to the past three business days.  You can read more about each of those days at their respective links below:

(11/9/2016)    Worst Day For Mortgage Rates in Over 3 Years
(11/10/2016)  Mortgage Rate Pain on Par With Taper Tantrum
(11/14/2016)  Mortgage Rates Skyrocket to 4%. New Normal?

Revisiting the question posed by yesterday's article, is 4%+ the new normal?  As is always the case, there's never any way to be sure what the future holds when we're dealing with financial markets.  Although past precedent suggests a good possibility of a bounce back, there are examples of similar movement where rates didn't make it back below the levels seen on the 4th day of the move (which is today in the present example) for an entire year!  That alone is a big enough risk to dissuade all but the most aggressive risk-takers from trying to time the top of the rate market for now.  If we see a more substantial push back toward lower rates, it will go a long way toward easing fears that we're repeating the scarier examples of past rate spikes.

Loan Originator Perspective

After the huge move to the worse for mortgage rates, I was so hoping we could see a nice relief rally.  Well, we aren’t getting that today but we are seeing some improvement.  Might we get a rally in the days ahead, sure, but the trend is not our friend right now.  Locking is the way to go.  A couple lenders have repriced for the better today, so wait til the end of day and lock your loan.  -Victor Burek, Churchill Mortgage

Today's MBS improvement is almost out of pity.  Keep in mind we shed almost 300 basis points in a single week.  I am of the belief that this recent move following the election is too much, too fast, without the proper foundation.  I have been eyeing 2.25-2.32 on the 10 YR TSY as my ceiling for floating with the hope of a reversal.  Hope unfortunately is not a strategy, discipline is, therefore I will be patient until we break above 2.25-2.32, and even more patient as we trade right below.  Remember, mortgage rate setters (secondary) will take away more than what has occurred out of protection.  As "normalcy" sets back in, we start to see improvements just out of risk adjustments.  The recent trade caught most people by surprise.  I am banking that it will be short lived.   -Gus Floropoulos, VP, The Federal Savings Bank

Today's Best-Execution Rates

  • 30YR FIXED - 4.0%
  • FHA/VA - 3.75%
  • 15 YEAR FIXED - 3.25%
  • 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, and exploded higher following the presidential election
  • Clearly-defined uptrends provide higher-than-average motivation to lock, especially when the pace of rising rates accelerates quickly

  • 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).