January 5, 2018
Mortgage rates moved lower following a weaker-than-expected jobs report. The so-called "jobs report" (officially "The Employment Situation") is--on average and over time--the most important piece of economic data on any given month. While it has recently taken a back seat to the likes of the Consumer Price Index (CPI... an inflation report), it always has the power to move bond markets. Bonds, in turn, move mortgage rates.
Today's jobs report missed the mark. The traditional implication is for slightly lower rates, and that's exactly what happened... at first.
Apart from the aforementioned CPI report, economic data has generally been less important to rates than it has been in the past. The reaction to the jobs data was quick, shallow, and ultimately reversed within an hour. Still, it provided a temporary boost that allowed lenders to offer rates that were just slightly lower than yesterday's.
Bonds weakened heading into the afternoon. Several lenders responded by issuing rate sheet adjustments (for the worse). Lenders who didn't reissue rates would need to account for the weakness next Monday. In other words, they'll be starting the weak at a slight disadvantage.
Loan Originator Perspectives
Bonds regressed today, despite a tepid December NFP report. It's increasingly apparent to me that inflation expectations are growing (whether accurate or not), which puts us in a rising rate environment. I'm still locking early, for loans closing within 30 days. -Ted Rood, Senior Originator
If you floated overnight, the morning rate sheets were slightly better. If you missed the opportunity to lock in this morning before the reprices, i think i would roll the dice and float until Monday. We have no major data on Monday and bonds are still holding under resistance...so lock the lows, float the highs. -Victor Burek, Churchill Mortgage
I would lock all loans at submission, currently. Rates could certainly go either way, but there is very little reason to believe they are headed lower in the short term. The trend, though minor, is moving towards minor rates and I'm unclear on the immediate event that is likely to reverse that and make them go lower. -Brent Borcherding, brentborcherding.com
Beware! 2018 technical trend is not friendly. The 2.42 trend has been broken which is unfriendly for bonds and rates. Considering how long it's been since we've been outside of the 2.42 trend I would tread very cautiously. Our near term hope is that we can get under 2.42 and hold there. The jobs report today was not very strong and that didn't do it so what will? I'm asking. What? -Jason Anker - Sr. Loan Officer
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 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.