November 15, 2017
Mortgage rates fell today, largely in response to the past two days of bond market improvement. In other words, lenders had been keeping their guard up ahead of today's key inflation data (The Consumer Price Index, or "CPI"). While it's true that a strong CPI report had the potential to push rates back to the highest levels since this summer, today's data wasn't strong enough. In fact, most of the metrics were roughly in line with forecasts.
Still, the strength and resilience in bond markets shouldn't be discounted. Bonds also digested strong Retail Sales data and managed to maintain stronger levels achieved overnight. In general, "strength" in bond markets translates to lower mortgage rates, although there can be some lag between the two.
Most lenders continue quoting conventional 30yr fixed rates in the 4.0% range, but today's improvement brings some of the aggressive lenders back down to 3.875% on top tier scenarios. Most borrowers will simply see today's improvement in the form of lower closing costs (or a bigger lender credit) on the same rates quoted yesterday.
With the inflation data out of the way, there is less immediate risk in the coming days. That said, rates have yet to commit to a strong move below their best recent levels. That means locking and floating should still be approached cautiously, but perhaps with slightly more room for optimism compared to the beginning of the week. Whatever the case may be, the potential for a bigger move in the near future remains, but the odds have evened out a bit as to the direction of that move.
Loan Originator Perspective
Bond markets posted minor gains today, as more details and doubts on the Senate's tax reform proposal emerged. Whether House and Senate can concur on tax reform (and whether the finished product would boost economic output) is far from a given. The fact markets didn't sell off after this AM's higher than expected consumer inflation data bodes well for rates, but we're still range-bound. Float/Lock is a virtual toss-up, tie goes to locking. -Ted Rood, Senior Originator
My clients and i have been very much leaning toward locking lately. We are seeing some bond strength today despite data that would indicate the opposite. With headwinds on tax reform and no major economic reports hitting tomorrow, i am leaning toward floating overnight. My rate sheets do not reflect the current rally. -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.