April 30, 2018
Mortgage rates didn't move much today, which keeps them right in line with last week's lowest levels. That sounds pretty good! Unfortunately, any time prior to last week, those "lowest levels" would have been the highest in more than 4 years.
To make things simple, look at like this: rates didn't move more than an eighth of a percentage point (.125) for most of March and early April (lenders typically divide rate sheet offerings in 1/8th increments). Last week brought rates a quarter of a point (.25) higher at its worst, and now we've recovered about an eighth. In other words, we're right in between the March plateau and last week's highs.
The rest of this week brings several important economic reports including Friday's big jobs report (The Employment Situation, aka "Nonfarm Payrolls"). This is the single biggest piece of economic data when it comes to labor markets and a longtime flashpoint for interest rates. Investors are curious to see if last month's excessively weak reading was an isolated event or a sign of labor market tightening.
If it's much weaker than expected this Friday, it would likely be good for rates. Balance that against the fact that rates had enjoyed the aforementioned stability in March, and the recent trend has been decidedly unfriendly. It makes sense to remain on guard against additional rate spikes until and unless we can make some better improvements than those seen over the last few business days.
Loan Originator Perspective
Bond markets posted slight gains today ahead of the week's looming data. We get a Fed statement Wed, and jobs data Wed/Fri. Although we seemingly hit rates' ceiling last week, I'm not banking on further drops either. Risk averse clients should grab the gains and lock. -Ted Rood, Senior Originator
My rate sheets do not show the recent improvements we have enjoyed over the last couple days. If your rate sheets are similar, i would definitely float over night and evaluate pricing in the morning. If your rate sheets show much of the recent gains, then locking in would be wise. -Victor Burek, Churchill Mortgage
A Big Week ahead in the Financial Markets. Keep your finger on the Lock Button as I recommend Floating cautiously. - Al Hensling
Today's Most Prevalent Rates
- 30YR FIXED - 4.625%-4.75%
- FHA/VA - 4.25%-4.5%
- 15 YEAR FIXED - 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've been moving higher in a serious way due to headwinds that cannot be quickly defeated. These include the Fed's increasingly restrictive monetary policy outlook, the increased amount of Treasury issuance to pay for the tax bill (higher bond issuance = higher rates), and the possibility that fiscal stimulus results in higher growth/inflation.
- While we may see periodic corrections to the broader trend toward higher rates, it's safer to assume that broader trend can and will continue. Until that changes, it makes much more sense to remain heavily-biased toward locking as opposed to floating.
- 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.