Mortgage rates rose moderately today, keeping them in line with recent highs.  The run to those highs took place largely over the past week as markets quickly adjusted their expectations for a Fed rate hike at next Wednesday's meeting.  As of last Thursday, market-implied probability was about as high as it ever gets.  Similarly, rates haven't moved much from last Thursday.  They were down just slightly on Friday and up by about the same amount today.  

Combine the past few days of limited movement with the bigger-picture post-election range, and there's a sense that we're waiting for a verdict about where we go next.  There have been a few similar instances over the past few months (where rates have been waiting for some big news/event to act as a verdict on the range), but rates have generally approached those events from the CENTER of the range as opposed to the upper edge.  

All of the above makes the next 6 business days scary.  It's ultimately next Wednesday that has the biggest potential to push rates higher or lower, but there's plenty of room for volatility between now and then.  Incentive to float is much lower than it normally is when rates are at the top of a reliable range.

Loan Originator Perspective

I continue to favor locking once within 30 days of funding.  Until next week’s FOMC announcement is released, bonds will have a tough time mounting any meaningful rally.  Even if they do, lenders will be slow to pass along improvements.  So for now, not much to gain by floating but a lot to risk. -Victor Burek, Churchill Mortgage

Today's Best-Execution Rates

  • 30YR FIXED - 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).