June 15, 2018
Mortgage rates fell again today, bringing the average rate just slightly lower on the week. Unlike the past 2 days, there were no big ticket calendar events today. Instead, motivation came from market jitters of new tariff announcements and the ensuing retaliation from China. Markets ultimately decided it wasn't the end of the world (yet) and bounced back in the other direction (higher stocks, higher rates) during the 2nd half of the day.
Fortunately, the bounce in rates (via the bond market) wasn't big enough to force mortgage lenders to adjust their rate sheets for the worse. That knife cuts both ways though. If bonds were to merely hold flat by the start of Monday's trading, the implication would be for slightly higher rates to begin the day.
Loan Originator Perspective
Rally makes it time to Lock if you have not already done so. Cautiously floating for loans closing later than 30 days. -Al Hensling
Unless your rate sheets show some nice gains, i think i would roll the dice and float over the weekend. I feel lenders tend to be conservative with pricing on a Friday when bonds are rallying. As always, if you are happy with current pricing lock and forget it. -Victor Burek
Bond markets survived a week filled with potential perils, emerging near the low end of rates' recent ranges. I'm not sure there's much room for further improvement without dramatic motivation. 50/50 lock/float, but if you float, don't get greedy. "Pigs get fat, but hogs get slaughtered". -Ted Rood
Today's Most Prevalent Rates
- 30YR FIXED - 4.625
- 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.