October 12, 2017
Mortgage rate data collection is tricky business. Some sources rely on survey data that can have a limited collection window and a significant lag. Other sources rely on incredibly aggressive quotes that tend to have caveats that limit the rates' availability and applicability to the average top tier scenario. We take a different approach that takes all the potential distortion and confusion out of the process. The result is the most accurate day-over-day mortgage rate movement available, and today's a good day for it.
Reason being: today is Thursday! Why is Thursday cause for exclamation? It's the day of the week that Freddie Mac's Primary Mortgage Market Survey is released. This is the long-standing benchmark for mortgage rates as far as financial markets and news media is concerned. There's nothing wrong with it over the long term. It actually tends to track fairly well with our numbers (but again, over the long run).
Over shorter time frames, Freddie's survey can miss the mark because only Monday and Tuesday carry much weight in determining a number for the entire week. Last Tuesday was the best day of that week for rates and this Tuesday was the worst day of the week for rates. As such, Freddie is reporting a big jump higher.
Looking at the rest of the respective weeks, we see rates rise into the end of last week and fall each day of the current week. In fact, there are more than a few lenders who are quoting better rates today than they did on ANY day in the previous week. That improvement will be reflected in Freddie's numbers next week, assuming a market shock doesn't send day-over-day rates screaming higher tomorrow or Monday.
For what it's worth, we're still not talking about very big moves. Most of the change from one day to the next has come in the form of the upfront costs associated with any given rate. For example, if you were being quoted 4.0% on Tuesday, you'd still likely see 4.0% today, but with slightly lower closing costs (or a slightly higher lender credit, depending on your scenario).
Loan Originator Perspective
Tomorrow we get consumer inflation data which will most likely move the markets. If inflation comes in hotter than expected, i suspect bonds will react negatively and probably break out of the current trading range to higher yields. Lower inflation will allow bonds to hold current range and possibly break out to lower levels. Not so sure the risk of floating is worth any potential gains. So, if you think CPI is lower than expected, float, higher than expected, lock, unsure or don't care, i would lock. -Victor Burek, Churchill Mortgage
Bond prices rose slightly today, while remaining near their lowest levels since late July. (Remember, low prices means higher interest rates). Today's treasury auction posted decent results; tomorrow brings widely-watched consumer inflation data. I'm still locking early, until we see some definitive determination for rates to drop. No reason to float until then. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 3.875-4.0%
- 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.