Mortgage rates fell modestly today, but not enough to make it back to the lows seen earlier this week.  4.25% is still the most prevalent 30yr fixed rate on top tier scenarios, meaning day-to-day movement has been limited to upfront costs (sometimes referred to as "points," depending on the source of information).  

Since last Friday, the range has been exceptionally narrow leading up to tomorrow's Employment Situation (the big "jobs report").  This is the most important scheduled economic report each month.  While its impact can vary, it always has tremendous potential to move markets in either direction.  Given that today's rates are slightly lower than the average over the past few weeks, and the trend has been toward slightly higher rates during that time, a more cautious strategy makes good sense with respect to locking/floating.

Loan Originator Perspective

If you are within 30 days of closing, you should strongly consider locking today.  Tomorrow we get NFP which definitely can move the market.    After Wednesday’s ADP report, NFP looks like it will come in better than expected which isn’t typically good news for mortgage rates.   At this point, I think more to risk than to gain by floating.  -Victor Burek, Churchill Mortgage

Looks like this morning was a good lock opportunity for near term closings.  We revisited the lowest levels from the past five days only to see a reversal bring us to the highs of the day.  With NFP tomorrow you’ll need to have courage to float.  Other employment figures from earlier this week were strong, will it carry over to NFP tomorrow?  That’s the question.  Even if the number is strong my hope will be that our range holds and our worst case close would be 2.52 or 2.6 within the longer range.  I’d feel pretty bullish about bonds if this is as bad as it gets tomorrow.   -Jason B. Anker, Vice President- Loan Officer at Salem Five

Today's Best-Execution Rates

  • 30YR FIXED - 4.25%
  • FHA/VA - 3.75%
  • 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 return to pre-election levels until well after Trump takes office.  Rates can move for other reasons, but it would take something big and unexpected for rates to get back to pre-election levels. 
  • 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).