May 4, 2018
Mortgage rates were sideways today, on average, but only after the dust settled on some morning volatility. The big jobs report was released at 8:30am ET, and it frequently has an impact on the bond market that underpins mortgage rates. While today's effects weren't huge, they were the biggest we've seen this week and they accounted for the quickest swings between stronger and weaker levels.
The data itself was a bit weaker than expected. Specifically, the economy added only 164k jobs compared to a median forecast calling for 192k. Still, this was "good enough" as far as many traders were concerned, given that last month's numbers were more than 60k lower when they were first released.
Rates' first reaction was to improve, thanks to the weaker numbers. But once traders got the initial reaction out of their system, they agreed that it was "good enough," thus pushing rates back up. Many lenders had already published the day's first rate sheets before the volatility truly set in. That left those lenders in a position to issue reprices (new, negatively revised rate sheets). It was those revisions that brought the average back in line with yesterday's.
Loan Originator Perspective
Bond markets cheered, then shrugged off today's tepid NFP jobs report, ending with small gains. We're seemingly stuck here, with treasury yields locked near 2.95%. I'll keep locking early, at least for clients within 30 days of closing. -Ted Rood, Senior Originator
Volatility continues. Those that locked early today were rewarded with some gains. Market is clearly undecided as to its direction.
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.