April 13, 2018
Mortgage rates were slightly higher for most lenders today even though underlying bond markets suggested the opposite. This is partly a timing issue. Yesterday saw bond markets weaken throughout the day. Weaker bonds imply higher rates. After a certain amount of weakness, mortgage lenders will adjust rates and re-issue new rate sheets (aka a "negative reprice"). Many lenders did this yesterday, but not all of them. Even among the group that repriced, most of them did so earlier in the afternoon and bonds continued to weaken through the end of the day.
The net effect of all of the above is that most lenders had some catching up to do with bond market weakness that they hadn't fully accounted for yesterday. Those that didn't merely kept rates roughly unchanged.
Intraday volatility was, once again, closely linked with the stock market. This isn't always the case, but bonds/rates are at a crossroads. They're not ready to decide on their next big move on their own. As such, they're willing to take cues from stocks for the time being. Be aware, this correlation will come and go throughout the day on any given day. It's not safe to EXPECT that it will continue.
The good news is that they didn't land too far from yesterday's levels in the grand scheme of things, and are still technically closer to the bottom of their March/April range.
The saving grace for slightly higher rates is the fact that the range over the past 2 months has been exceptionally narrow. Most borrowers haven't seen their quoted NOTE rate change during that time (it's only been the "EFFECTIVE rate" which takes upfront costs into consideration).
Loan Originator Perspective
Continued volatility confirms bias towards locking at origination to avoid disappointment. -Al Hensling, Mortgage Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.5%
- FHA/VA - 4.25%
- 15 YEAR FIXED - 3.875%
- 5 YEAR ARMS - 3.5-3.75% 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 beginning of 2018
- The scariest part of the move higher looks like it ended as of early February, and rates have been generally sideways since then
- Even so, the potential remains for more weakness (i.e. higher rates). It makes more sense to remain defensive (i.e. more inclined to lock) until we've seen a more convincing shift lower.
- 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.