April 19, 2018
Mortgage rates jumped higher today as bonds continued a move away from narrow Springtime range seen in March and early April. Bonds dictate rate movement and yesterday saw the bond market make its first convincing attempt to break what had been a friendly, narrow range. This of course coincided with a narrow range for rates in the past few months. It was also "friendly" relative to the trajectory seen in the first part of the year.
When these sorts of ranges become established, the boundaries take on a special significance. As soon as the floor or the ceiling is definitively broken, there tends to be some additional momentum in the direction of the break. That's why yesterday's headline mentioned that bonds were suggesting "more trouble ahead." I'd hoped to be wrong about that, but here's the trouble: today's rates are as high as they've been since March 21st. A few lenders are slightly higher. Thankfully, that doesn't mean too much of a change for most rate quotes. Conventional 30yr fixed quotes for top tier scenarios are up 0.125% at most. Even so, it makes sense to remain lock-biased as we may not have seen the last of the "additional momentum" mentioned above.
Loan Originator Perspective
Ouch. Market has spoken and it was not pretty. Definitely Lock at Origination. -Al Hensling, Mortgage Originator
Bonds regained their footing this PM after a sharp morning sell off. My pricing was off roughly .375 in price from yesterday's, certainly a significant hit. Days like today are exactly why I've been espousing locking early. The trend is not our friend. -Ted Rood, Senior Originator
Until this trend looks like it is going to change, my best advice is lock at application if your closing is 45 days or less. We've broken out of a range that has held rates lower and there is more risk with pricing worsening as opposed to improving at current levels in my opinion. If you want to float, make sure you are working with a professional that monitors intraday activity. Never smart to chase an eighth in rate when you could easily lose a quarter in this volatile market. -Steve Chizmadia, NMLS 244902, Home Loans With Steve, licensed originator of World Wide Credit Corporation
Today's Most Prevalent Rates
- 30YR FIXED - 4.5%-4.625%
- FHA/VA - 4.25%-4.5%
- 15 YEAR FIXED - 3.875%-4.0%
- 5 YEAR ARMS - 3.625%-3.875% 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.