Mortgage rates moved higher for the 5th time in the past 6 business days.  The past 2 days have combined to bring rates a full .125% higher.  That's the increment by which rates are most commonly divided (i.e. 4.0, 4.125%, 4.25%, etc.).  Under normal circumstances rates might move that much over 2 weeks as opposed to 2 days.  In fact, it happened twice in this most recent cycle (Jan 18/19, and Jan 24/25).  The only time we see rates moving any faster is during major blowouts like the weeks following the election or the 2013 taper tantrum.  

The average lender is once-again quoting 4.25% on top tier conventional 30yr fixed scenarios.  This isn't the first time we've seen 4.25% this year, but closing costs are slightly higher today.  That means effective rates are at 2017 highs.  Several lenders are already up to 4.375% and a scant few remain at 4.125%.

In the bigger picture, the recent weakness suggests a trend toward higher rates is taking shape after markets paused and corrected heading into mid-January.  This trend would have its most severe implications if rates break above mid-December's highs, and it's safest to assume that's where we're headed until/unless we see a big shift in the other direction.  Bottom line: early January was a nice break in the storm.  We knew the move toward lower rates would run out of steam at some point before retracing too many of the steps taken in late 2016.  The past few days increasingly confirm that break is over.

Loan Originator Perspective

If you took the risk in not locking yesterday, things are not any better today.  Again, under normal market conditions we would consider floating to the upper support of a range and locking as we got closer to the lower threshold of resistance, but we are not in a normal market environment.  Many unknowns, uncertainties, and what ifs are plaguing our economic outlook and will continue to do so until we have some clarity with our new administration.  For the time being, the only safe bet is to lock, even on a day following back to back sell-offs.  Just because a stock has dropped in price two days in a row, doesn't mean it's a good buying opportunity.    -Gus Floropoulos, VP, The Federal Savings Bank

The trend is not your friend right now.  With stocks rallying through the 20,000 level bonds are taking it on the chin and mortgage rates are moving higher.  No sense playing any float games in this environment so if you're in a position to lock in your interest rate by all means I think you should do so.  -Hugh W. Page, Mortgage Banking Officer, Seacoast Bank

Today's Best-Execution Rates

  • 30YR FIXED - 4.25%
  • FHA/VA - 3.75%
  • 15 YEAR FIXED - 3.375%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates had been trending higher since hitting all-time lows in early July, and exploded higher following the presidential election
  • Some investors are increasingly worried/convinced that the decades-long trend toward lower rates has been permanently reversed, but such a conclusion would require YEARS to truly confirm

  • With the incoming administration's policies driving a large portion of upward rate momentum, mortgage rates will be hard-pressed to return to pre-election levels until well after Trump takes office.  Rates can move for other reasons, but it would take something big and unexpected for rates to get back to pre-election levels. 
  • We'd need to see a sustained push back toward lower rates (something that lasts more than 3 days) before anything less than a cautious, lock-biased approach makes sense for all but the most risk-tolerant borrowers. 
  • 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).