August 8, 2018
Mortgage rates were modestly higher today. Much like yesterday, there's a catch! Yesterday's catch was that underlying bond markets had weakened enough during the day that today's rates were more likely start out higher. That was indeed the case. Therefore, today's "opposite" catch is that bond markets strengthened enough during the day that it implies slightly lower rates tomorrow morning, all things being equal.
In other words, bond markets didn't improve quite quickly enough for most lenders to adjust mortgage rate sheets in the middle of the day today, but they did improve enough for rates to be just a bit better if nothing changes between now and tomorrow morning.
All of the above requires a fairly familiar caveat: we continue talking about "movement" in mortgage rates when, in fact, there really hasn't been much--at least by most definitions. Quoted rates haven't budged. Borrowers are only seeing day-to-day changes in the form of modest adjustments to upfront costs/credits. That's not to say that volatility couldn't increase in the near future--just that it's been in short supply recently.
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.