Mortgage rates finally moved higher after three straight days of solid improvement.  If it's any consolation, today's rise wasn't on par with even one of the past 3 days of gains, although that could change by tomorrow morning.  Weakness in the bond market primarily affected US Treasuries today, as opposed to the mortgage-backed-securities that dictate mortgage rates.  That allowed many lenders to make it through the day without recalling rate sheets and "repricing" for the worse.  If trading levels in bond markets don't change between now and tomorrow, it's likely that several lenders will be offering slightly higher rates in the morning.

4.125% remains the most common conventional 30yr fixed quote for top tier scenarios.  It would take a more substantial market movement to get the average lender back to 4.25%.

Yesterday, I said that the winning streak increasingly invited a pull-back in rates.  From here, locking is still the right call for risk averse borrowers.  Risk tolerant buyers have tougher decisions to make as today's market movements brought 10yr Treasury yields right to 2.40%--the first potential "stop loss" level for those interested in following bond markets more closely than the typical .125% gaps seen between mortgage rates.

Loan Originator Perspective

Today wasn’t what we were looking for but you can’t win them all.  Locking in gains now wouldn’t be a bad idea for short term closings.  Longer term I’m not convinced today marks the end of a trend.  I’d be willing to float though a small amount of additional losses from here.  My stop loss for locking is 2.42. -Jason B. Anker, Vice President- Loan Officer at Salem Five

Bond markets took a breather today, and rate rose after dropping the past 3 days.  This is hardly surprising, and further reinforces our current rate range.  There's still no apparent long term trend here, and any short term trends seem to last a few days at most.  In situations like this, I tell borrowers if they're happy with current pricing, might as well lock and take uncertainty out of the equation, presuming they're within 30 days of closing. -Ted Rood, Senior Originator

Today's Best-Execution Rates

  • 30YR FIXED - 4.125
  • 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).