February 7, 2018
Mortgage rates surged higher today, with most lenders ending up back in line with the 4-year highs seen on Friday afternoon. At issue--among other things--is the fact that the stock market has been unwilling to continue offering up a fresh supply of drama. Earlier in the week, that drama helped rates bounce lower in a way that bordered on optimistic. Even so, it didn't make much sense to get too hopeful, which is why we noted that any tactical opportunities to float one's rate had passed as of yesterday.
There was actually some room for hope earlier this morning, but it didn't last long. Without ongoing stock losses, bonds (which dictate rates) just aren't interested in going against the prevailing momentum yet. A somewhat poorly-received Treasury auction in the afternoon kicked the weakness into high gear. In other words, investors weren't eager to buy 10yr US Treasury debt below 2.80%. Lower investor demand for longer-term bonds means prices move lower, and lower bond prices mean higher rates.
Assume rates can continue to move higher until we see clear evidence to the contrary. Rest assured, whenever that evidence emerges, you'll hear it here first.
Loan Originator Perspective
Bonds started the day green, posting minor gains, but rapidly sold off by mid PM, further confirming what we already knew: the trend is not our friend. My morning pricing worsened by noon CST, as did many other lenders. If you haven't heard me say it enough yet, here it is again: Lock early, or be prepared for drastically different (worse) pricing when you lock later. -Ted Rood, Senior Originator
Nothing has changed on my outlook. Lock as soon as possible. The trend continues to not be our friend. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.375-4.5%
- FHA/VA - 4.0-4.25%
- 15 YEAR FIXED - 3.625-3.75%
- 5 YEAR ARMS - 3.0-3.5% 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.