July 26, 2018
Mortgage rates were higher again today, depending on the lender. Some lenders had already adjusted yesterday's rate sheets for late day market weakness the followed the US/EU trade announcement (i.e. trade war averted). Lenders who didn't adjust rates yesterday were simply left to do so this morning.
Markets have worked through most of this week's big ticket events (the things that could influence the bonds that influence mortgage rates). On 4 out of the past 4 days, we've seen the highest intraday bond yields move slightly higher. This forms a negative trend that should keep mortgage seekers feeling defensive when it comes to locking vs floating--especially in light of the fact that this is the first noticeable trend in more than a month.
In other words, rates were exceptionally sideways from June 27th through last Friday. Now they look to be on the move and that move is unfriendly for fans of low rates. While rates will eventually bounce lower, trying to time the bounce can be like trying to catch a falling knife.
Loan Originator Perspective
Bonds posted meager gains today, and then promptly lost them! I'm still locking early. -Ted Rood, Senior Originator
I believe much of the direction of rates will be determined tomorrow with GDP. If that comes in better than expected or even as estimated, I think rates will continue to move higher. If worse, I don't think we get much benefit, some, but not much and not enough to risk floating. So locking is the best choice today. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.625-4.75
- FHA/VA - 4.25-4.5%
- 15 YEAR FIXED - 4.125%
- 5 YEAR ARMS - 3.75-4.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates moved higher in a serious way due to several big-picture headwinds, including: the Fed's rate hike outlook (and general policy tightening), 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.
- Despite those headwinds, the upward momentum in rates has cooled off heading into the summer months. This could merely be the eye of the storm, or it could end up being the moment where markets began to doubt that prevailing trends would continue.
- It makes sense to remain defensive (i.e. generally more lock-biased) because the headwinds mentioned above won't die down quickly. Temporary corrections can be explained away, but it will take a big change in economic fundamentals or geopolitical risk for the big picture to change. While that doesn't necessarily mean rates have to skyrocket, there's a good chance it means rates will struggle to move much lower than early 2018 lows until more convincing motivation shows up.
- 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.