September 18, 2017
Mortgage rates resumed their recent uptrend today, after taking a quick break to end the week last Friday. The result is another push up to the highest levels in just over 3 weeks. The average scenario is being quoted rates that are about an eighth of a point higher compared to the lows seen in early September. The most prevalent top-tier conventional 30yr fixed rates still range from 3.875% to 4.0%, but the latter is increasingly in the spotlight.
Context is important when it comes to this recent rate spike. The market movement that preceded it was arguably "too good," with rates benefiting from an unusual combination of geopolitical risk surrounding North Korea and event risk surrounding Hurricane's Harvey and Irma. It's not that markets responded to those events in unexpected ways--simply that the particular confluence of events was unexpected. In that sense, the recent rate spike simple gets us back to where we otherwise might have been, albeit in a somewhat abrupt manner.
The best candidate for the "next big thing" will be the Fed Announcement coming up on Wednesday. After moving higher over the past week and a half, rates are ready to digest the Fed's message from a more neutral position. Even so, it still makes more sense to stay on guard against upward pressure until and unless we see renewed momentum toward lower rates.
Loan Originator Perspective
Rates continued their upward march today, and it's now safe to say the trend is not our friend. The good news is that rates' ascent has been (for the moment) been orderly and moderate. I favor locking all loans within 30 days of closing; don't see a lot of potential for short term gains here. -Ted Rood, Senior Originator
Time to play defense. FOMC meets this week and are expected to outline terms for reducing their re investments into mbs and Treasuries. The Fed is a huge buyer of bonds and as they withdraw from buying that will pressure prices lower and yields higher. Until all is known, rates in my opinion will find it difficult to improve. The smartest move right now is to lock in. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 3.875-4.0%
- FHA/VA - 3.5%
- 15 YEAR FIXED - 3.25%
- 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.