Mortgage rates rose again today--this time more noticeably than yesterday--bringing them to the highest levels in more than 2 weeks.  For most, however, that sounds a lot worse than it actually is.  In fact, the interest rate at the top of a loan quote has a good chance of being the exact same as the any other time during the past 2 weeks.  How does that work?!

The catch is that the "note rate" (the one that is applied to the principal balance to determine monthly payments--the only rate most people talk or care about, generally) is only part of the equation.  There are also upfront costs associated with any given rate.  Those costs allow for finer adjustments.  Those adjustments technically affect the "effective rate."  So while the interest rate might be unchanged in many cases, the cost of the mortgage has nonetheless risen.

Loan Originator Perspective

Bonds took a step back today following a robust consumer confidence report.  While rates didn't move abruptly, the last two days' losses illustrate why floating now is risky.  There's just not enough potential gain to offset the risk, in my eyes.  I'm locking new applications closing within 30 days.  -Ted Rood, Senior Originator

Bonds continue their move to higher yields.   My clients are favoring locking in once within 30 days of closing.  Bonds have proven time and time again they do not want to go lower than 2.82ish on the 10yr.  With that solid floor below, there is very little benefit in floating. -Victor Burek, Churchill Mortgage

Today's Most Prevalent Rates

• 30YR FIXED - 4.625-4.75
• FHA/VA - 4.25-4.5%
• 15 YEAR FIXED - 4.125%
  
• 5 YEAR ARMS -  3.75-4.25% depending on the lender

Ongoing Lock/Float Considerations 

• Rates moved higher in a serious way due to several big-picture headwinds, including: the Fed's rate hike outlook (and general policy tightening), 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.
  
  
• Despite those headwinds, the upward momentum in rates has cooled off heading into the summer months.  This could merely be the eye of the storm, or it could end up being the moment where markets began to doubt that prevailing trends would continue.
  
  
• It makes sense to remain defensive (i.e. generally more lock-biased) because the headwinds mentioned above won't die down quickly.  Temporary corrections can be explained away, but it will take a big change in economic fundamentals or geopolitical risk for the big picture to change.  While that doesn't necessarily mean rates have to skyrocket, there's a good chance it means rates will struggle to move much lower than early 2018 lows until more convincing motivation shows up.

• 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.