May 24, 2018
Mortgage rates moved lower again today, bringing them to the best levels in at least 2 weeks. This assertion is very much at odds with the prevailing mortgage rate headlines today. News stories abound with talk of sharp increases to fresh 7-year highs (google news search if you don't believe me), yet nothing could be more of a disservice to the demographic that typically looks for mortgage rate news (people who are in the market)!
If you are indeed in the market or otherwise have a vested interest in day-to-day mortgage rate fluctuations, you need to understand that all those news stories are based on Freddie Mac's weekly rate survey, and that Freddie Mac is wrong. To be fair, it's not so much "wrong" as it is "late." Unfortunately, Freddie's survey typically captures lenders' claimed rate quotes for Monday and Tuesday.
Given that last week saw rates move much higher on Wed/Thu and that this week didn't see much improvement until Wed/Thu, it makes sense that Freddie's reported rate would be higher. But rest assured, TODAY's ACTUAL mortgage rates are lower than anything seen since May 14th at the earliest.
Now, if someone wants to argue that May 14th's rates were effectively in line with 7-year highs, I'd be the last person to argue. The bigger picture is indeed ugly. But the point is that it's much less ugly than it was a few days ago--a fact that could be very important to the decision-making process surrounding homebuying and the mortgage rate lock process.
Loan Originator Perspective
Unexpected rally today. If you have been floating, take advantage of the improved pricing and lock. - Victor Burek, Churchill Mortgage
The canceled N Korean summit helped rates improve marginally today. With tomorrow's early close and a 3.5 day weekend looming, pricing's likely as good as we'll see until Tuesday (at the earliest). I'm locking these gains in. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.75%
- FHA/VA - 4.5%
- 15 YEAR FIXED - 4.25%
- 5 YEAR ARMS - 3.75-4.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates have 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.