December 27, 2017
Mortgage rates had a bad week last week, quickly rising to the highest levels in months. To make matters more frustrating, there weren't any clearly-delineated reasons for the rate spike. Making sense of the movement required a dive into the esoteric conversation about the year-end bond trading environment.
That esoteric conversation is still the only way to make sense of today's movement, but this time around, the move is in our favor. What had been an abrupt, inexplicable spike higher last week has now been largely undone by an abrupt, inexplicable move lower today.
Rates were only modestly lower this morning, but as underlying bond markets rallied more aggressively, most lenders issued updated rate sheets this afternoon. Borrowers who had seen top tier rates move up an eighth of a percentage point (.125%) from 4.0% to 4.125% are once again seeing 4.0% after today's improvement. Lenders who didn't reprice today would likely pass along the gains tomorrow morning, as long as bond markets hold relatively steady.
Today's Most Prevalent Rates
- 30YR FIXED - 4.0%-4.125%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.375%-3.5%
- 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.