Mortgage rates were slightly higher today relative to last Friday's levels, leaving them near the 2-year highs seen last Thursday.  Volatility continues to run much higher than normal, with lots of intraday reprices (lenders changing rates in the middle of the business day) over the past 2 weeks, and generally big changes from day to day.  

Bond markets (which underlie mortgage rate movement) began the day in much weaker territory, but managed to make some huge improvements heading into the afternoon.  As such, most lenders were quoting higher rates this morning before repricing to slightly lower rates as the day progressed.  To be clear, that's "lower vs this morning."  Even after the improvements, we're still not back to Friday's levels.  That said, most borrowers would still be seeing the same contract rates today, with the only deterioration being slightly higher upfront costs, depending on the scenario.  Most lenders are quoting conventional 30yr fixed rates between 4.125 and 4.25% on top tier scenarios.

Loan Originator Perspective

Another volatile Monday after digesting the weekend news of the Italian vote and various speakers. The range appears to be settling in post-Election between 2.28-2.50 (in terms of 10yr Treasury yields). Key points are at 2.35 and 2.42. Base your lock/float decisions on where we are until something moves the needle outside of these ranges. More info to come in the next few weeks with ECB and the Fed Reserve meeting. If you get close to the 2.28 or 2.35 range and are closing soon, locking may make sense. If 2.42 gets breached and you hadn’t locked, bond traders may get interested once yields approach 2.50. But stay tuned and in touch with your loan officer over the next few weeks.  -Jeff Anderson, Loan Officer, Salem Five Mortgage, LLC

Today's Best-Execution Rates

  • 30YR FIXED - 4.125-4.25%
  • FHA/VA - 4.0%
  • 15 YEAR FIXED - 3.375%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates had been trending higher since hitting all-time lows in early July, and exploded higher following the presidential election
  • Some investors are increasingly worried/convinced that the decades-long trend toward lower rates has been permanently reversed, but such a conclusion would require YEARS to truly confirm

  • With the incoming administration's policies driving a large portion of upward rate momentum, mortgage rates will be hard-pressed to make significant improvements until after Trump takes office.  Rates can move for other reasons, but it would take something big and unexpected for rates to move appreciably lower. 
  • We'd need to see a sustained push back toward lower rates (something that lasts more than 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).