December 29, 2017
Mortgage rates were unchanged again today, keeping them at the same stronger levels achieved on Wednesday afternoon. Wednesday's gains were much-needed as they went a long way toward erasing the damage from a quick spike that took rates to the highest levels in months last week.
The caveat to the back-to-back weeks of volatility is that this is the end of December. Mortgage rates are driven primarily by trading in bond markets, and trading in bond markets becomes exceptionally sparse this time of year. In market speak, the word is "illiquid." Imbalances between buyers and sellers always cause some movement, but illiquidity means that rates move much more than they otherwise would.
Thankfully, this week's illiquidity worked in our favor, and rates returned to the dominant range of the third quarter of 2017. We could be waiting for the 2nd full week of January before we get a clear sense of how traders are approaching the bond market in 2018.
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.