Mortgage rates continued higher, adding onto a trend that began last Wednesday.  A day earlier, rates hit their best levels in more than a month due to political risks in Europe.  The trend back toward higher rates has coincided with the defusing of those risks. 

Heading into this week, we said rates would be "deciding" if they could remain under a key ceiling.  When we're looking at the mortgage market, rates aren't as precise as, say, the US Treasury market.  For instance, 2 different lenders could be more than an eighth of a percent off from each other despite almost always moving by the same amount in the same direction every day. 

Because of that, it can make sense to follow key levels in terms of 10yr Treasury yields.  If mortgage rates could only have one yardstick against which to measure themselves, that would be it.  The 10yr yield level in question was 2.94% and that's right where it ended today.  Bottom line, the "key ceiling" is still technically intact, but now without any buffer versus current levels.   Any weakness tomorrow means we're re-entering a rate range we'd prefer to avoid.

Loan Originator Perspective

Bonds sold off significantly this afternoon, triggering many lenders to worsen their rates.  We've given up all last week's "Italy may bolt the EU" gains, it's time to play defense.  I'm locking at application.  - Ted Rood, Senior Originator

Today's Most Prevalent Rates

  • 30YR FIXED - 4.625-4.75%
  • FHA/VA - 4.375%
  • 15 YEAR FIXED - 4.00%
  • 5 YEAR ARMS -  3.75-4.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates have been moving higher in a serious way due to headwinds that cannot be quickly defeated.  These include the Fed's increasingly restrictive monetary policy outlook, the increased amount of Treasury issuance to pay for the tax bill (higher bond issuance = higher rates), and the possibility that fiscal stimulus results in higher growth/inflation.

  • While we may see periodic corrections to the broader trend toward higher rates, it's safer to assume that broader trend can and will continue.  Until that changes, it makes much more sense to remain heavily-biased toward locking as opposed to floating.
  • 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.