May 3, 2018
Mortgage rates bounced back today--that is, they bounced back DOWN after rising slightly yesterday. The improvement came courtesy of strength in European bond markets (stronger = more bond buying = higher bond prices = lower bond yields, aka "lower rates"). Weaker domestic equities markets also played a part. While the correlation isn't always well-behaved, it's not uncommon to see big stock losses translate to some excess demand for bonds (and again, more bond market demand/buying = lower rates).
The size of the move left something to be desired, but it was better than nothing! Although the average client wouldn't likely see a lower NOTE rate from the average lender, the costs associated with that rate would be noticeably lower than yesterday, and even slightly lower than Tuesday's offerings.
Tomorrow brings the important Employment Situation (aka "the jobs report" or "nonfarm payrolls"). This is the biggest piece of economic data for the US jobs market each month and it always has the potential to cause volatility for rates. With that in mind, if you saw a pretty good improvement on today's rate sheets, it's worth a hard look in terms of locking vs floating. While things could improve tomorrow, rates could just as easily move back toward recent highs.
Loan Originator Perspective
Bond markets rallied slightly today ahead of tomorrow's NFP report. It'll be interesting to see whether rate growth beats forecasts. Since we're closer to the bottom of our recent rate, I'll be locked up on all loans closing within 30 days. -Ted Rood, Senior Originator
Market continues to buck upward trend. Continue to float 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.