Mortgage rates are right in line with yesterday's levels, and yesterday saw rates fall at the fastest pace of the year, ultimately reaching the lowest levels in more than a week.  As such, today's rates are still the lowest in more than a week!  You might not know that if you happened to hear about rates today from a big media outlet.  Most are reporting the "highest rates of 2017."  Here's why that's happening.

Freddie Mac publishes a weekly survey that's generally regarded as the final word in long-term mortgage rate tracking.  If you were only interested in long-term trends in rates, the survey would suit you very well.  It's tremendously accurate over the long haul.  If, however, you're interested in day-to-day or even week-to-week movements, the survey numbers can often give false impressions.  This happens because most of the responses (where loan originators tell Freddie what rates they're quoting) come in on Monday and Tuesday.  As such, it would be more accurate to think of Freddie's rate survey as a Mon/Tue vs Mon/Tue number, rather than a week-over-week number.

As we witnessed yesterday, a lot can happen in the second half of the week!  Freddie is right that rates were higher this week, but only if we're looking at Mon/Tue vs last Mon/Tue.  If we consider that rates continued to move higher during the second half of last week and then moved abruptly lower in the second half of this week, we can quickly appreciate the level of misdirection in the survey rates vs actual daily rate changes.

All that to say rates are still at their best levels since March 7th today!  All of the damage since then was erased, and the average lender continues quoting conventional 30yr fixed rates of 4.25% on top tier scenarios.

From a lock/float standpoint, this improvement could be considered one of those "tactical opportunities" referenced below.  If you floated yesterday, the absence of follow-through improvement today should be the first indication that it's time to consider locking.  Risk-takers wouldn't be outside their rights to continue floating, but it's less advisable than it was yesterday.  I personally would have wanted to see further improvements today in order to feel like taking that risk in the current environment. 

Loan Originator Perspectives

Well the Fed did it. Raised another .25% on short term rates...and we have benefited with slightly better pricing across the board.  Turn times are amazing, rates are decent. If you are taking cash-out/buying may be a good time to contact your originator and discuss rate/term options that will benefit you financially!  -Robert Van Gilder NMLS 263112, 815819

We had a nice rally yesterday and saw improved rates/pricing, but the rally appears to have stalled today.  In my opinion it is a great time to lock in the recent gains.  -Timothy Baron Licensed Loan Originator, NMLS #184671

Today's Best-Execution Rates

  • 30YR FIXED - 4.25%
  • FHA/VA - 4.0-4.25%
  • 15 YEAR FIXED - 3.5-3.625%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • 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

  • Still, it would take something very big and unexpected for rates to make a big, sustained push back toward pre-election levels.   Even then, it would take time to confirm such a shift.
  • With fiscal and monetary policy paths both clearly putting pressure on rates, at least one of those would need to make a noticeable change before anything but a cautious, lock-biased approach makes sense as a baseline strategy.  Floating should only be considered as a tactical opportunity to capitalize on temporary corrections. 
  • 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).