November 8, 2017
Mortgage rates held steady again today, keeping them in line with the lowest levels in more than 3 weeks. They've also been uncommonly calm so far this week, which certainly isn't a bad thing when we're at 3-week lows. The calm trend began showing cracks at the end of the day in terms of underlying bond markets (movement in bonds ultimately dictates movement in mortgage rates).
Bonds began to weaken in the afternoon. "Weakness" in bonds corresponds to higher rates. To put the move in context, bonds are still in better territory than they were on any day last week. In other words, the weakness is quite modest for now.
The risk is that it signifies some sort of shift because of bond trading behavior over the past 2 days. To oversimplify a complex phenomenon, bonds (the ones we watch to get a bead on mortgage rate movement) hit the same roadblocks for 2 days in a row, and are in the early stages of moving back in a less friendly direction. It could be a false alarm, but until they've reestablished a positive trend (i.e. making progress toward new rate lows), it makes more sense to play it safe in terms of locking vs floating.
Loan Originator Perspective
Bond markets "sheltered in place" today, staying largely unchanged despite a well-received treasury auction. MBS are near key resistance points at their 50 and 100 day moving averages, which may limit our short term gains. I'd love to see this rally continue, but it appears we'll need some economic woes or geopolitical turmoil for that to happen. Looks like a locking opportunity to me. -Red Rood, Senior Originator
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.