December 19, 2017
Mortgage rates surged higher today, ultimately making it back to levels not seen since late October in some cases (depending on the lender). Part of the reason rates were able to cover so much ground in a single day is that the recent range has been exceptionally narrow. In fact, it wouldn't be too surprising to see the same interest rate quoted today and yesterday with the difference being higher closing costs for today's quote. All that having been said, many borrowers will actually be looking at the next eighth of a percent (.125%) higher in rate.
Given that the tax bill passed the House today (actually, it looks like it may have to go for a revote tomorrow, due to a technicality), it's easy to assume the move in rates is related. It's not. The move in rates is it's own animal, having to do with the year-end trading environment in bond markets and other esoteric motivations not related to any headline events. As unsatisfying as that may be, it's actually better than giving credit to the tax bill for serving as the inception of some new thrust toward even higher rates. That doesn't mean such a thrust isn't on the horizon, but if it is, it's not a factor of anything that happened today.
Today's Most Prevalent Rates
- 30YR FIXED - 4.0%-4.125%
- 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.