May 8, 2018
Mortgage rates are still technically in a sideways holding pattern, but today's move took them slightly higher inside their recent range. The average lender is back in line with Friday afternoon's offerings. This leaves most borrowers looking at rate quotes that aren't quite as high as those seen on April 25th (4-year highs), but still .125-.25% higher compared to the end of March.
The unfortunate development today actually occurred in the Treasury market. Although mortgages are officially dictated by the price of mortgage-backed-securities (MBS), Treasuries do more to set the tone of the overall market for interest rates in the US. They're like the trunk of the tree and the mortgage bond market is one of the bigger branches. In other words, big developments in Treasuries have implications for mortgage rate momentum.
Most recently 10yr Treasury yields were trying to break below 2.95%--a floor that repeatedly proved hard to break. As of Friday morning, it looked like there was a good chance of rates pivoting below 2.95%, but by Friday afternoon, we were in limbo again. Now today, the 10yr yield is up and over 2.97%. That's not necessarily a death knell for mortgage rates, but it's definitely not a positive indicator of bigger-picture momentum.
Loan Originator Perspective
Volatility Strikes again! No doubt continue to Lock at Origination. No possible benefit in waiting. -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.