Mortgage rates continued higher today, bringing them back in line with Monday's levels.  Part of the rise was due to weaker trading levels in bond markets.  Just as important is the fact that many lenders didn't raise rates yesterday afternoon as the bond weakness began (weaker bond markets imply higher rates).  In other words, unless bond markets improved overnight, this morning's rates were already destined to be a bit higher than yesterday's.  

Even though today's increase was far more substantial than yesterday's, it leaves rates at levels that are still slightly better compared to last Friday.  Many lenders continue to offer 4.125% on top tier conventional 30yr fixed scenarios, though several have moved back up to 4.25% with today's weakness.

Loan Originator Perspective

With no major data until Wednesday of next week and with the 10 year holding under 2.42 I say float.  As soon as we break 2.42 I’ll change my mind.  -Jason B. Anker, Vice President- Loan Officer at Salem Five

Bonds regressed today, and now stand virtually unchanged from Monday's levels.  Three days of gains this week, two of losses, zero net change.  We continue to be range-bound, which lessens the risk/benefit of floating.  Next week  brings consumer and producer inflation data that may guide bonds; for now we're just treading water.  -Ted Rood, Senior Originator

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).