April 2, 2018
Mortgage rates moved lower today as underlying bond markets generally followed a much bigger move in stocks. It's a common misconception that stocks and bond yields ("rates," for all intents and purposes) follow one another. They certainly CAN move in the same direction at the same time during certain times of the day, but it's not the sort of correlation to count on.
That said, the stock/bond relationship was certainly a factor today. The only catch was that it took quite a bit of stock market weakness to generate a merely noticeable move in bond markets and, hence, interest rates. Still, with rates already fairly close to recent lows and with lenders generally holding back ahead of the extended holiday weekend, all it took was that modest improvement in bond markets for mortgage rates to drop to the lowest levels since early February.
The risk from here on out is that a bounce in stocks could pave the way for a bit of a correction in bonds. If that happens, rates would move back up into last week's range, making the current lows look like a good opportunity to lock.
Loan Originator Perspective
A mixed bag of information yields volatility in the market. Earnings season for Stocks coming up soon Trade Wars and Jobs Reports looming. My opinion is to cautiously FLOAT at Application and prepare to take advantage of the recent improvements if any indication of change becomes evident. -Al Hensling, Mortgage Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.5%
- FHA/VA - 4.375%
- 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.