September 1, 2017
Mortgage rates were sideways to slightly higher today despite a weak reading of the Employment Situation (aka "the jobs report"). This is traditionally the most influential piece of economic data on any given month as far as bond markets (which drive mortgage rates) are concerned. Recent intractability of inflation combined with several years of solid jobs gains have increasingly robbed this report of that historical influence.
Don't get me wrong. The jobs report is still a big trading day for markets. It's just that we're not seeing bonds end up where past precedent would suggest. Specifically, today's report would clearly suggest lower rates by the end of the day. Instead, the average lender is slightly higher.
Part of that has to do with the fact that rates improved fairly solidly for the past 2 months and that rally may be getting ready to take a breather. There was also other economic data this morning that DID suggest rates move higher (ISM Manufacturing... another top-tier report, but not historically in the same league as the jobs data).
Ultimately, today only saw a token amount of weakness in bonds/rates. With congress back in session next week and the European Central Bank set to discuss its bond buying plans in 2018, we should know more about whether the recent rate rally is bouncing or just leveling-off.
Loan Originator Perspective
Bond markets yawned at today's tepid NFP jobs report, losing minimal ground when gains would have been more logical. Today marks the end of "summer" trading; next week may show where rates are headed with a policy statement from the ECB and bond traders' return from a summer in the Hamptons. Borrowers within 30 days of closing have a choice of grabbing the best pricing since November or rolling the dice. Frankly, I never liked dice games. My September loans are locked. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 3.875
- FHA/VA - 3.5%
- 15 YEAR FIXED - 3.125%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- Investors were relatively convinced that the decades-long trend toward lower rates had been permanently reversed after Trump became president, but such a conclusion would require YEARS to truly confirm
- Instead of continuing higher in 2017, rates instead formed a narrow, sideways range, and held inside until April. Investor perceptions are shifting such that fiscal reforms and other policy developments will need to live up to expectations in order to push rates higher. Geopolitical risks would also need to avoid flaring up (more than they already have)
- For the first time since the election, we're in a rate environment where you wouldn't be crazy not to lock at every little opportunity/improvement. Until/unless it's broken, the highest rates of early-2017 mark the ceiling, and we're now waiting to see how much lower we can go from here.
- 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.