November 1, 2017
Mortgage rates were slightly higher today, on average, as bond markets backed away from their stronger levels seen during the last 2 days of October. "Strength" in bond markets connotes higher prices for bonds and lower interest rates. In actuality, the bonds that dictate mortgage rates are fairly close to yesterday's levels. Additionally, some lenders are offering mortgage rates that are fairly close to yesterday's, but the median lender is a bit worse off due to weaker bond market conditions earlier this morning (bonds improved during the day, but not every lender changed rate sheets accordingly).
The Fed statement came out this afternoon, but it didn't contain any major revelations that affected rates. Based on the trajectory in markets, it looks like some investors thought the Fed might be a little more downbeat on inflation and the rate hike outlook. In that regard, the relatively unchanged verbiage of the announcement put an end to the day's bond market rally (and the prospects for more lenders to offer mid-day rate improvements).
Loan Originator Perspective
Today's Federal Reserve Policy Statement was a non-event, as both their tone and benchmark interest rate were essentially unchanged. Bond markets recouped small morning losses following the statement, and some lenders improved their PM pricing. Looks like our rising rate trend may be on hold, but I don't see much impetus for rates to improve significantly either. Conservative borrowers should lock within 30 days of closing. Those with a penchant for risk could float, cautiously. -Ted Rood, Senior Originator
Tomorrow has the potential to be a very good day or a very bad day for bonds. In the morning, we are supposed to get the House plan on tax reform and later in the day President Trump is to announce his pick for new Fed Chair. These events make it risky to float. If your lenders pricing is the same or better than yesterday, I would strongly consider locking in today. Rates always move higher faster than they move lower. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.0%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.375%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- 2017 had 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.
- While rates remain low in absolute terms, they've moved higher in a more threatening way heading into the 4th quarter, relative to the stability and improvement seen earlier in 2017
- The default stance for now is that this trend toward higher rates has the potential to continue. It will take more than a few great days here and there for that outlook to change.
- For weeks, this bullet point had warned about recent stability inviting a bigger dose of volatility. That volatility is now here. As such, locking is generally the better choice until the volatility is clearly dying down.
- 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.