Mortgage rates were noticeably lower this morning as bond markets responded favorably to the important jobs report.  While the headline job growth was stronger than expected (typically bad for rates), wages came in much lower than expected and were revised lower for the previous report as well.  That was enough for most lenders to offer lower rates with today's first set of rate sheets.  

Bond markets (which underlie rate movement) stayed strong throughout the morning.  Things changed in the afternoon when a member of the Fed (Williams) said the Fed may hike in March.  Perhaps even more damaging was Williams' mention of the Fed moving closer to ending its policy of reinvesting the interest it earns on its bond portfolio.  Those reinvestments are worth a lot in terms of low rates.  Bonds then lost everything they'd gained following the jobs data, ending the day roughly unchanged.

Lenders pulled back pricing in response to the market movement.  While 4.25% is still the most common top tier 30yr fixed rate, closing costs are slightly higher vs yesterday afternoon.  The change would be small though.  In fact, some lenders were in slightly better territory (but they were the exception).

Loan Originator Perspective

I continue to favor locking if within 30 days of closing.    Following weak earnings in today’s NFP report, bonds managed to move higher so I am seeing better rate sheets today.  I think it is wise to take advantage of the gains and lock in.  -Victor Burek, Churchill Mortgage

Weak wage growth in January's NFP report gave bonds a decent boost this AM, and my pricing improved from yesterday's.  Sadly, the gains evaporated by early PM amid some Fed inflation rhetoric, and it's very possible lenders will reprice worse as the day progresses.  Bottom line, we're still in the recent range, just bouncing within it.  Good time to lock for those floating, particularly if within 30 days of closing and if your lender's still on their AM pricing.  -Ted Rood, Senior Originator

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).