April 6, 2018
Mortgage rates moved back down to yesterday's levels after a much weaker read on job creation from the Labor Department. In general, weak economic data tends to push investors away from stocks and toward safer-haven assets like bonds. Excess bond-buying demand causes bond prices to rise and rates to fall.
The only catch with today's jobs report reaction is that movement in the bonds that specifically underlie mortgages was a bit smaller than in the broader bond market. For instance, the price of 10yr US Treasuries rose more than twice as much as the price of the most common mortgage-backed-security (MBS). In addition to lagging MBS, mortgage lenders haven't been keen on making big changes to their rate sheet offerings. As a result, rates are better today, but for some lenders, it's just as accurate to say "unchanged."
All caveats aside, in the recent context, today represents the best day for mortgage rates in roughly 2 months (or close to it, depending on the individual lender). Next week brings a key inflation report in the form of the Consumer Price Index. Investors are on the edge of their seats over the possibility of an increase in inflation. If it happens, rates will likely snap back into the higher range seen in March. If inflation stays flat or if it stumbles, recent rate resilience could get a second wind.
Today's Most Prevalent Rates
- 30YR FIXED - 4.5%
- FHA/VA - 4.25%
- 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.