December 18, 2017
Mortgage rates bounced modestly higher today, bringing the average lender back in line with last Wednesday's levels. Bond markets (which underlie mortgage rate movement) suggested a slightly bigger bounce. We may not have seen such a bounce simply due to timing. Specifically, bonds weakened throughout the day, but few lenders adjusted rate sheets in the afternoon. As such, we could begin the day tomorrow at a bit of a disadvantage, unless bond markets improve overnight.
For several months, 4.0% has been the most prevalently-quoted conventional 30yr fixed rate on top tier scenarios. We discuss "rates" as moving up and down during that time but in reality, the only things moving are the upfront closing costs associated with that rate. It's not uncommon for rates to be exceptionally flat heading into the end of the year, but in this case, they began flattening out in late September. This increases the potential for a bigger move whenever we finally see a break outside the recent range.
Loan Originator Perspective
Mortgage pricing stayed flat today (at least for my rates) despite some minor losses in bond markets. Tax reform passage seems virtually assured, and presumably is reflected in current pricing. Barring unexpected drama (North Korean or Trump inquiry), I'm guessing the rest of the year will be sedate in bond markets. I'll lock applications closing within 30 days, and discuss the pros/cons of locking for clients further out. -Ted Rood, Senior Originator
My clients are favoring locking in today ahead of the tax bill vote later this week. It appears its a done deal, so hopefully it has been fully priced in. With year end approaching and many traders already on vacation, i do not see a major rally coming that will improve rates. So if closing within 30 days, i would go ahead and take advantage of todays rate sheet then enjoy the holidays. -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.