September 7, 2017
Mortgage rates didn't move much today, despite plenty of strength in underlying bond markets. This would normally coincide with lower rates, so what's the deal?
The main issue is timing. Bond markets weakened yesterday afternoon. This would imply higher rates, but most lenders never went to the trouble of adjusting rate sheets intraday. As I said yesterday, those lenders would begin today at a disadvantage. Indeed they did, and that disadvantage was generally erased by the improvement in bond markets. Thus, lenders who didn't move rates higher yesterday were able to keep today's rates relatively unchanged, thanks to bond market gains. Lenders who DID raise rates yesterday were able to offer slightly lower rates today.
All in all, the average lender is quoting the lowest rates of 2017, with more than a few lenders at 3.75% on a top tier conventional 30yr fixed scenario. Most lenders are able to quote 3.875% now, though a few remain at 4.0%.
Loan Originator Perspective
Bond markets dodged a bullet today, as the ECB's policy statement and Chairman Draghi's press conference failed to ignite fears of imminent ECB bond tapering. By early PM, we regained yesterday's losses, and (for now) the slow trend to lower rates may be intact. It's certainly tempting to float loans closing more than 30 days out. For those floating and within 30 days of closing, I'd wait until late today (or tomorrow AM) to see if today's gains hit rate sheets, several lenders have repriced better already today. -Ted Rood, Senior Originator
Yesterday i favored locking as did most of my clients. With the late day move higher yesterday, that looked like a good call. Today though, bonds have managed to rally to their best levels of 2017!!! Rate sheets; however, do not reflect that. With lenders holding back on passing along the gains, I think floating overnight is the way to go. As always, if happy with current pricing, nothing wrong with locking. -Victor Burek, Churchill Mortgage
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.