October 4, 2017
Mortgage rates were very slightly lower today, but not by enough to have an impact on the actual interest rates being quoted. Specifically, the "effective rate"--which factors upfront costs into an overall cost of financing is slightly lower due to changes in those upfront costs. But borrowers will be seeing the same interest rate at the top of the page on today's loan quotes compared to yesterday.
In the bigger picture, rates are merely hovering around the highest levels in more than 2 months. Just 3 and a half weeks ago, they were at the best levels in more than 10 months. As dramatic as that sounds, the average top-tier conventional 30yr fixed rate quote has only moved an eighth of a percent higher during that time. The bigger concern would be a move higher from here. Both Treasury yields and mortgage rates have leveled off at a ceiling, of sorts. Breaking above that ceiling could signify more upward momentum heading into the end of the year.
Until that risk can be ruled out, locking continues to make more sense than floating. To quantify that, if 10yr yields are in the low 2.3's today, we wouldn't even begin to entertain a shift in the broader negative trend until 10yr yields hit the low-to-mid 2.2's.
Loan Originator Perspective
Rates continued ascending upward today, as we approached the lowest MBS prices since mid August. Our late summer rally, based on NK drama and hurricane destruction, has withered, and rates' trend is definitely not our friend. I'm locking early in the loan process, until I see a definitive reason not to. -Ted Rood, Senior Originator
The trend continues to NOT be our friend. Bond yields tried to push lower today, but following upbeat economic data they turned and all gains vanished. Rate sheets today are basically in line with yesterday. My advice today is the same, lock it up. Until this trend ends, locking is the way to go. -Victor Burek, Churchill Mortgage
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.