April 18, 2018
Mortgage rates moved higher today as bond markets continued a mildly weaker trend for the month of April. Bonds (which underlie rates) are under pressure for a variety of reasons. The most notable headwinds are longer-term and bigger-picture. Rates responded to these headwinds in a fairly big way in Jan/Feb and have basically been "taking a break" since then.
Rates have moved very little during this "break," with most borrowers being quoted the same NOTE rate on any given day in the past 2 months. Upfront costs have been the only way the modulate the EFFECTIVE rate of the average lender's 30yr fixed quote.
Today's move in bonds brings 10yr Treasury yields to their highest levels since March 21st. While this, in and of itself, doesn't rekindle the same sort of drama seen in the first 2 months of the year, it's raising questions as to whether or not we're headed back in that direction. Were the past 2 months just a temporary reprieve? The eye of the storm? There's no way to know the answer today. There's also no change to lock/float strategy, which has been generally lock-biased since mid-December.
Loan Originator Perspective
Continued volatility still favors locking at origination to avoid client disappointment. -Al Hensling, Mortgage Originator
Bonds regressed today amid potential North Korean detente. Treasury yields jumped to 2.87%, near a one month high. I've been locking early, and today demonstrates why. The trend still isn't our friend. -Ted Rood, Senior 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.