Mortgage rates were just slightly higher today, leaving them roughly in the center of a range that's persisted since mid-November.  During that time the average top-tier conventional 30yr fixed rate has been briefly as high as 4.5% and as low as 4.0%.  Those are the exceptions.  The range has predominantly been a narrower 4.125-4.375%.  The average lender is quoting 4.25% today, though there are a few offering 4.125%.  

The outright numbers are less important here.  They can vary quite a bit based on multiple variables.  The fact that rates have been sideways for so long is more relevant.  In fact, rates haven't merely been sideways.  The range has been growing progressively more narrow over the past several months.  

While this type of "consolidation" is not uncommon in the wake of big market movement, it does mean that rates will soon be forced to choose a direction.  Such breakouts tend to see extra momentum.  In other words, we're increasingly due for a bigger move.  If you roll the dice on that move being toward lower rates, there's additional reward for that risk.  For most borrowers, however, that potential for reward is overshadowed by the increased risk of a big move toward higher rates.

Loan Originator Perspective

Bonds were basically flat today, despite a well received 2 year note auction.  My pricing was virtually identical to Friday's.  As mentioned before, there's little motivation driving rates these days, and until some defining data does, we may idle at current levels.  Lock/float is a coin toss, but with treasury yields (2.43%) closer to the bottom than top of our current range, tie goes to locking over floating. -Ted Rood, Senior Originator

Bonds have attempted again to break lower but have been pushed back.   My rate sheets show some pretty nice gains compared to last week, so I advised clients to lock in the gains today.  We do have FOMC minutes released tomorrow and they can definitely move the market.  -Victor Burek, Churchill Mortgage

Recent attempts at higher yields lacked staying power.  I’m expecting to revisit the 10 years lower end range of 2.3 in the near future.  Obviously I continue to favor floating to some extent.   One are of concern for me is that our sideways trend has been consolidating (lower highs and higher lows) which typically leads to a break out.  If I knew which direction that breakout would be I wouldn’t need a day job.  Your guess is as good as mine.   -Jason B. Anker, Vice President- Loan Officer at Salem Five

Today's Best-Execution Rates

  • 30YR FIXED - 4.125-4.25%
  • FHA/VA - 3.75-4.25%
  • 15 YEAR FIXED - 3.375-3.5%
  • 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).