Mortgage rates moved lower again today as investors remained cautious amid political uncertainty at home and abroad.  Stocks began the day higher but lost ground throughout the day--indirectly helping rates.  That's not to suggest mortgage rates routinely take cues from stocks.  Rather, slumping stocks and falling rates speak to the same underlying trends.  Caution, fear, and the like, tend to increase demand for less risky assets like bonds.  As demand for bonds increases (sometimes, at the expense of stocks--like today), rates fall.

In and of itself, today's improvement was mild to moderate.  But taken together with yesterday, the gains were more meaningful as they brought a majority of lenders back to quoting 30yr fixed rates of 4.125% on top tier scenarios.  The transition from 4.25% is still very much "in progress," however.  More than a few lenders continue quoting 4.25%, but with slightly lower upfront costs vs yesterday.

In relative terms, today's rates are as low as they've been in 3 weeks.  We've only been able to say that one other time  since the election (early to mid January), and that turned out to be a good time to consider locking vs floating.  Past precedent doesn't guarantee a similar outcome, but the longer the winning streak continues, the more it makes sense to look for tactical opportunities to take advantage of the gains.

Loan Originator Perspective

Bond markets posted further moderate gains today, and we're near the best pricing in 3 weeks.  Overall, treasury yields have dropped .125% since January 25th, an impressive achievement.  I hesitate to call this a long term trend to lower rates (yet), but it's certainly a short term one,.  If you've floated this long, time to check your pricing and discuss pros/cons of locking with your loan officer.  I'll be having some of those conversations today myself!  -Ted Rood, Senior Originator

Bonds enjoying a nice rally today.   As of 1pm, several lenders have repriced for the better.  If you do want to lock in these gains, wait until as late as possible today to allow your lender time to pass along some gains.  Personally, I would float overnight to see if these gains can continue.   Lenders will be hesitate to pass along all of the gains. -Victor Burek, Churchill Mortgage

This is what we were waiting for.  The last few weeks of floating has paid off.  You should be at least 0.125% lower in rate today if you began floating in the last two weeks.  The question now is when to lock.  I’d hate to be this far ahead only to play my hand too long.  You have to know when to walk away right?  I’d start to consider walking away now if you’re happy but I’d like to see this run continue to 2.33. -Jason B. Anker, Vice President- Loan Officer at Salem Five

Today's Best-Execution Rates

  • 30YR FIXED - 4.125-4.25%
  • 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).