Mortgage rates jumped abruptly higher today for many lenders after reports of an informal show of hands in favor of John Taylor as Trump's potential Fed Chair nominee.  Taylor is one of two candidates being seriously considered, and he's generally seen as being less rate-friendly than the other candidate, current Fed board member Jerome Powell.  Trump indicated he was "very very close" to making a decision yesterday, so markets are especially sensitive to headlines that seem to answer the question: how will be the next person to lead the world's biggest and most influential central bank?

The Fed doesn't specifically set mortgage rates, but Fed policies have far-reaching consequences for the broader bond/rate market.  Most mortgages are securitized--basically, they become bonds--and thus tend to move with substantial correlation to more mainstream bonds like 10yr Treasury Notes.  On that note (pun optional), 10yr yields broke over 2.42% for the first time since May 2017 today.  Some investors view this as evidence of a big-picture shift toward even higher rates.  They may be right!  But other investors are waiting to see who Trump actually nominates and are also keeping an eye on other variables like the European Central Bank's policy announcement coming up on Thursday, as well as domestic legislative efforts (especially tax reform potential). 

In the meantime, mortgage rates are as high as they've been since early July, but that's still the most alarming way to phrase the reality because the gap between the very lowest rates last week and this afternoon's highest rates is still less than one eighth of one percent for almost every lender.  That's $7/mo per $100k financed.  While that's not insignificant over time, it keeps rates operating in a historically narrow range and still much closer to long-term lows than anything else. 

Loan Originator Perspective

Bonds of all ilks sold off again today, as chatter on potential Fed chairs and tax reform rattled markets.  We're past the point of concerns about rates rising, they ARE rising.  I've been locking early, glad of that, and will continue to do so.   -Ted Rood, Senior Originator

Today's Most Prevalent Rates

  • 30YR FIXED - 4.0%
  • FHA/VA - 3.5% 
  • 15 YEAR FIXED - 3.25%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • 2017 has proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016.  Most of the rate spike was done by the end of 2016 and we've generally moved sideways to lower since then

  •  The biggest question is whether or not this counter-intuitive trend has an expiration date.  Rates haven't been immune from brief corrections back toward higher levels, and each correction causes concern that the good times are over.

  • Despite those concerns, we've seen rates make new lows in April, June, and September.  Although rates have been rising since early September, they'd have to move even higher before we'd consider a change in the bigger picture theme.

  • All of the above having been said, past precedent suggests we're due for a much bigger dose of volatility some time soon.  
  • Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders.  The rates generally assume little-to-no origination or discount except as noted when applicable.  Rates appearing on this page are "effective rates" that take day-to-day changes in upfront costs into consideration.