April 20, 2018
Let's clear one thing up before we begin. Freddie Mac, MBA, and Ellie Mae all noted new 4-year highs in mortgage rates this week. They are all technically wrong. This has to do with the way their data is collected and/or averaged. And while I have no doubt that they are accurately conveying the results of their data collection efforts according to their methodology, there is a more accurate way to do things. Specifically, we can track actual lenders' rate sheets every day.
Even if we take an average of that daily data, we still find that rates aren't quite back to 4-year highs just yet. Depending on the lender, these occurred on one of the days near the end of February. In fact, some lenders' rates from March 21st are still higher than today's. Are we talking about very big differences between now and then? Not at all! But if we're going to talk about rates hitting 4-year highs, we might as well be precise about it.
One thing everyone can agree on is that today's rates are higher than yesterday's, which in turn, were higher than Wednesday's. The lion's share of that move higher happened yesterday, but today's underlying bond market movement suggests there's a bit more pain yet to be priced-in to the average lender's mortgage rate sheets. If bonds deteriorate further this afternoon, some lenders could adjust their rate sheets today. Those who don't will will simply be starting next week at a disadvantage. In other words, even if bonds are unchanged on Monday morning, mortgage lenders would likely need to begin the day with higher rates compared to today's.
Loan Originator Perspective
Rates are now near 4 year highs and it does not appear that there is any sign of relief in the short term. Bias is still towards locking what you have and secure profits. -Al Hensling, Mortgage Originator
New day, but same old losses in bond markets today. Since Tuesday PM, treasury yields have increased a full .125%, a fairly staggering amount. Lock early or be prepared for higher rates later. -Ted Rood, Senior Originator
Bonds have broken through support ending our recent downtrend. With today being a Friday, and bonds in the red my rate sheets are slightly worse than the drop in MBS price. I usually do not like locking on a Friday, so i think floating over the weekend might be worth the risk. -Victor Burek, Churchill Mortgage
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.