June 12, 2018
Mortgage rates didn't move much today. That keeps them in line with some of the highest levels in nearly 7 years, though the same could be said for a majority of the days since mid-April. Rather than talk about where we are and where we've been, the hotter topic is where we may be going.
Stop me if you've heard this one before, but rates could move higher or lower. That's always the case because the financial markets that underlie rates (and everything else, for that matter) are always doing their best to adjust today's prices for everything that can be known about the present and the future. Presently, the range of potential outcomes is wider than normal because of the nature of upcoming events.
Specifically, tomorrow's Fed Announcement could push rates quickly higher or lower in the afternoon. Less than 24 hours later, the European Central Bank is out with their own hotly-anticipated policy update. In both cases, investors aren't wondering about rate hikes (we already know the Fed will and the ECB won't). Rather, it's the accompanying details that run the risk of causing significant volatility for rates.
Loan Originator Perspective
The safe move is to go ahead and lock. Only case for floating right now is we just had our last auction of the week. Quite often bonds do rally after all the new supply has been absorbed, but we do have the Fed on tap. I don't think the Fed will say anything unexpected to cause a sell off but i don't see anything happening that will result in a rally. Not much to gain by floating but floating over night and locking before the fed might be okay. -Victor Burek, Churchill Mortgage
Rates holding precariously. Continue to Lock at Origination to avoid disappointment. -Al Hensling
Today's Most Prevalent Rates
- 30YR FIXED - 4.625-4.75%
- FHA/VA - 4.375%
- 15 YEAR FIXED - 4.00%
- 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.