April 4, 2018
Mortgage rates were sideways to slightly lower today, depending on the lender. That presents something of an opportunity because underlying bond markets have been suggesting a move in the other direction over the past few days. In other words, the bonds that underlie mortgage rates have weakened, but rates themselves are stable or stronger.
Much of this paradox has to do with the time of day that lenders generate their rate sheets. For example, if rate sheets were updated in real time, we might be seeing slightly higher rights this afternoon. With all of the above in mind, today's relatively lower rates are compelling for those who are in a position to lock. If nothing changes about underlying markets by tomorrow morning, most lenders will likely be slightly worse off. Of course, "worse" is a relative term, because today's rates are in line with 2-month lows. On the other hand, the overall range has been very narrow over that 2-month time frame.
Loan Originator Perspective
Bonds held their ground today as equities' concern over trade tariffs continued. It's going to take some serious drama for rates to drop too much from here, feels like we're in a holding pattern again. I'm 50/50 on lock/float, and in that case usually opt towards locking for all but the most aggressive clients. -Ted Rood, Senior Originator
Despite breaking into a new lower range, bonds are having a difficult time adding to those gains. Rate sheets do show improved pricing, so my clients are favoring locking in those gains. I continue to feel you have much more to lose than gain at these levels. -Victor Burek, Churchill Mortgage
Holding below 2.80 on the 10 year treasury continues to be a short term victory. But at today’s levels around 2.78 I’m not feeling too warm and fuzzy. So where do we go from here? I’d tentatively float as long as we stay under 2.80% but stay close to the lock button. Or have your loan officer keep their finger near it. We haven’t seen a trigger to get us under the levels of the last week, maybe NFP and the details there will be that stimulus. Or maybe traders are just waiting to see if there are any surprises before making trades they’ve been holding on to. Stay tuned until Friday. -Jeff Anderson, Loan Officer
Very interesting comments out from the CIS of PGIM Fixed Income Fund Robert Tipp. He predicts that long term bonds will stay low as the Fed continues to raise short term rates. Possible good news for Mortgage Rates. Interesting that the Fed Raised Rates and Mortgage Rates have improved. Float cautiously. -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.