May 11, 2018
Mortgage rates had a pretty good day yesterday, but weren't able to extend that winning streak today--at least not in any significant way. The unwillingness to improve is part of a phenomenon in the broader bond market (which is responsible for "interest rates" in general).
When certain trading levels in the bond market are repeatedly approached, but not broken, they take on increased significance. Some investors view such levels as barriers that are less likely to be broken, but the more mainstream approach is to simply view any future break of such a level as an important signal.
2.95% has emerged as this sort of level in 10yr Treasury Yields--the main yardstick against which all other long term lending rates in the US (like mortgages) are measured. Treasuries are having a very tough time sustaining a break below 2.95%. Until and unless that changes, mortgage rates will also have a tough time making any meaningful improvements.
Loan Originator Perspective
Taking advantage of slightly improved rate sheets today and locking clients in. We are near the bottom of the current range of 2.95 on the 10 yr, so lock the lows. -Victor Burek, Churchill Mortgage
2.950 10 Year looks like the floor we can't get below. Until we do it is Lock at origination. -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.