November 10, 2017
What a difference 2 days make! Freddie Mac's weekly rate survey was out yesterday prompting multiple news outlets to declare "slightly lower rates" on the week. Given that Freddie's survey only gathers responses through any given Wednesday, the results jived with what we were seeing on lenders' actual rate sheets.
On Wednesday, mortgage rates were indeed at their best levels in more than 3 weeks. But after 2 days of relatively aprupt weakness, rates quickly find themselves at the highest levels in 2 weeks. Adding to the frustration is the absence of any single, obvious motivation for the weakness. In order to account for it, we'd have to discuss several esoteric developments in bond markets (if you're into that sort of thing, I go into more detail in the MBS Commentary channel).
One simple development is "uncertainty." Oftentimes, uncertainty helps bonds because it raises questions about economic progress. Investors move money into bonds (which pushes rates lower) to avoid the volatility or weakness they might be worried about seeing in stocks. In the case of dueling banjos belting out tax reform tunes (both the House and Senate have drafted bills), the uncertainty is more neutral. It doesn't necessarily imply potential weakness or strength in stocks or bonds, so both have given up some ground over the past 3 days. To reiterate, that's just one of several potential factors at the moment.
Regardless of causality, the movement itself is disconcerting. It places the short-term trend squarely in negative territory (i.e. pointed toward higher rates until further notice).
Loan Originator Perspective
The trend has turned and is unfriendly again. If you missed the opportunity to lock earlier this week, i would go ahead and bite the bullet today and lock up. If bonds break our current ceiling around 2.40 on the 10 year note, it could get much uglier very quickly. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 3.875-4.0%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.25-3.375%
- 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.