Mortgage rates moved higher for the 6th time in the past 7 business days, even after several lenders offered mid-day improvements in the afternoon.  That leaves them at their highest levels of the year, although things were worse for most lenders earlier this morning.

4.25% remains the most prevalent quote on top tier conventional 30yr fixed scenarios.  Like yesterday, a few more lenders moved up to 4.375%.

It continues to be the case that there is little rhyme or reason to the short-term market movements causing volatility for rates.  The bigger picture themes are more relevant.  Those themes suggest a trend toward higher rates has taken shape although the implications would be more severe if rates break above mid-December's highs.  While we're not there yet, it's safest to assume that's where we're headed until/unless we see a big shift in the other direction.  

Loan Originator Perspective

We find ourselves yet again bleeding out as we keep testing the higher levels of the broader range.  There's a slight chance we reject this move and find rates reversing course, but that's a crap shot I'm not willing to take. Locking in remains to be the only sure bet with the current momentum building against us.  -Gus Floropoulos, VP, The Federal Savings Bank

Anyone in a typical lock position is locked.  The market is so crazy with its mood swings and Trump fascination that MBS bonds cannot be trusted.  The more difficult decisions are with a more common buyer - the new construction delivery from May through August, given our resale inventory is anemic.  What to do with those clients who might pay an upfront fee or not and in most situations add .125% to .625% to their rate for extended lock.  With each client we review pros and cons, but realize there is no playbook for today anymore.    -Matt Hodges, Charlottesville Sales Manager, Presidential Mortgage Group

The range is still the range. We’re still in the post-election range of 2.29-2.60. Got a little scarier earlier today, as it does when we approach the top of said range. But after today’s bond auction we’ve moved back towards the middle, currently around 2.51. For tonight I might wait to see how tomorrow AM goes before locking. If you’re a conservative person it’s not terrible to lock these days as even when we swing from one side of the range to the other the most improvement we’ve seen is an 1/8th or a ¼ in rate. And as always lately, keep an eye on the geopolitical world.  -Jeff Anderson, Loan Officer, Salem Five Mortgage, LLC

Bonds are experiencing quite the turn around since the final auction ended today.  It isn’t uncommon to see bonds rally once all new supply has been absorbed.   As of 2pm, several lenders have repriced for the better and I expect more to follow.  If you are planning to lock today, wait until as late as possible.  I personally think floating overnight might be worth the risk as lenders will be slow to pass along all the gains. -Victor Burek, Churchill Mortgage

We’ve spent more than a month now in a boring trading range between 2.33 and 2.6.  Until this rage is broken my plan is to lock near the bottom and float near the top.  My unofficial count has us over 2.45 less than one third of the days in the last month and I’ve floated while above 2.45 while waiting for better opportunities to lock. -Jason B. Anker, Vice President- Loan Officer at Salem Five

"Rates continued their upward spiral today, convincingly breaking through prior support levels.  The trend is NOT our friend, and the biggest question is how much more rates go up from here, not whether they'll drop soon.  Locking early is a must in my eyes, don't see any reason to float and risk further losses." -Ted Rood, Senior Originator

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).