Mortgage rates were sideways to slightly lower today, depending on the lender.  Financial markets closed early for Memorial Day weekend, and will be fully closed on Monday.  As such, lenders won't be updating rate sheets again until Tuesday.  Today's rate sheets aren't too terribly different from yesterday's.  Most lenders are unchanged and a few are offering just slightly lower costs for the same "note rates" seen yesterday.  The most prevalently-quoted conventional 30yr fixed rate continues to be 3.75% on top tier scenarios, but there are several lenders at 3.625%. 

The financial markets that underly mortgage rate movement are in a tricky spot at the moment.  Investors are weighing the possibilities of a Fed rate hike in June or July.  Although mortgage rates don't move in lock-step with the Fed Funds Rate, an increase in rate hike expectations usually results in mortgage rates moving higher, and vice versa.  

Rates are on the upper edge of a range that has been getting more and more narrow as we approach the June 15th Fed Announcement.  Anxiety could cause a break outside that range even before then, and that would create a temporary, but potentially faster-paced move toward higher rates.  Such an event would have to be taken seriously in the short term (i.e. favor locking vs floating), but the final verdict on this range won't be in until we get official word from the Fed.  Even then, there are several ways the ball could bounce, but we'll cross those bridges as we come to them in mid-June.

Loan Originator Perspective

"Technical levels have been the most relevant indicator for my lock vs. float decisions and recommendations to my clients.  The 10 YR Treasury has been in a confined range, with limited volatility above and below certain key levels.  All that being said, we are consolidating further in the mid 1.8's on the 10 YR (a great place to be), a lot of energy is building up here.  With the ongoing headlines of a Fed rate hike, bullish moves in the stock market, and a lack of willingness for yields to move lower, it makes a strong case to lock for many.  I think trading between 1.84-1.87 is a safe zone, and would only recommend locking if yields presented a threat of breaking out above, or a benefit of trading below.  There has been plenty of data to push rates in either direction, but it appears the big money traders are waiting for something much more definitive.  In the interim, always be ready to pull the trigger.  Have a safe Memorial Day weekend." -Constantine Floropoulos, VP, The Federal Savings Bank

Today's Best-Execution Rates

  • 30YR FIXED - 3.75%
  • FHA/VA - 3.25%-3.5%
  • 15 YEAR FIXED - 3.00%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • The Fed finally hiked on December 16th, causing fears of rising rates in 2016, but markets began the new year with rates moving surprisingly lower.  Major losses in stocks and oil prices were part of the same trend of investors moving away from risk.
  • After bottoming out fairly close to all-time lows in February, rates have seen only brief episodes of volatility in a low, narrow range.  

  • The Fed's most recent announcement at the end of April reinforced their cautious approach to rate hikes.  This helped rates improved through mid May
  • Now some investors are getting concerned that the Fed may be more prepared to hike rates than markets currently expect.  This could create volatility and pressure toward higher rates heading into the June Fed meeting, thus favoring locking vs floating.
  • As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.'  Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy.  It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).