Mortgage rates moved higher today in most cases, but not by much. More interesting is the fact that rates held their ground as well as they did considering several strong economic reports this morning. Strong economic data typically leads investors to sell bonds, which in turn results in lower bond prices and higher rates.
This morning's dynamic was quite different. While the stronger economic data was briefly acknowledged with some temporary weakness in bonds, the broader trend remained favorable. Bonds actually improved a bit heading into the afternoon.
If today's rate sheets were based solely on this morning's market movement, rates would be slightly lower compared to yesterday. But lenders still had to account for some of yesterday's late day bond market weakness. Today's modestly higher average rate is the net effect of this morning's resilience and yesterday's weakness.
Investors are curious to hear what President Trump has to say at his "address of the joint session" tonight. This has the potential to kick off the next wave of momentum in rates--either back toward the higher end of 2017's range or down into new lows for the year. Given that we're already fairly close to recent lows, it's a good time to lock for folks who don't want to risk losing any money. Risk-takers would be justified in waiting to lock as long as they're OK with locking at a loss tomorrow if things don't go their way.
Loan Originator Perspective
With bond yields near recent lows, I think it is wise to look at locking today. Tonight’s Presidential Address to Congress has the potential to move rates one way or the other. Since this happens tonight, you wont have a chance to lock before any bad news for rates. Even if we get good news for rates, I am not sure we have much more room to improve so the risk outweighs the potential reward. -Victor Burek, Churchill Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.125%
- 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).