Mortgage rates were lower for the 7th day in a row today, further extending their push into the lowest levels of the month.  At first, that positive movement was driven by relief that the Fed's rate hike outlook didn't accelerate as much as investors expected.  That motivation ran its course by the end of last week.

Since then, political uncertainty has been a hot button, with widespread doubt surrounding the new administration's ability to pass the new health care bill.  There have been several other contributing factors driving political uncertainty, but Thursday night's health care vote is a focal point.  Most media reports suggest passage is unlikely, but that a modified version of the bill might be able to clear the House.  Even though the Senate would still need to vote, if any sort of healthcare bill passes the house tomorrow night, mortgage rates could rise quickly.

Either way, investors are coming to a fork in the road where they'll generally be casting votes (with money!) as to whether or not the new administration can get things done.  If the answer is yes, expect pressure on rates.  If the answer is no, the recent positive trend could continue.  Either way, bigger market movement is the likely result for both stocks and interest rates.  

The average lender is quoting conventional 30yr fixed rates of 4.25% on top tier scenarios, but with lower upfront costs today.  Several more lenders moved down to 4.125%, and fewer laggards remain at 4.375%.

Loan Originator Perspectives

More congressional uncertainty and bond gains today as continued concern over fiscal growth impacted investor confidence.  This bond rally is reaching the point where it can either stall, or (potentially) continue to roll.  Will Congress pass a healthcare bill, or meaningful economic reforms?  Your guess is as good as mine, but for now, the stalemate is boosting bonds.  I'm still inclined to float, with a finger on the lock button.  -Ted Rood, Senior Originator

With rates having dropped recently, and a couple of potentially pivotal events upcoming (Yellen speech and healthcare vote), it feels like another good time to lock in the recent rate gains.  In addition, 10 year Treasury yields are approaching the bottom of the recent post-election trading range.  I see this as another indication to recommend locking in your rate and not take the potential risk of floating. -Timothy Baron Licensed Loan Originator, NMLS #184671

If you have been floating, you are being well rewarded with the recent bond rally.  Could this rally continue, yes…but I do think it would be wise to lock in these recent gains.  Any further gains will be slow to come and lenders even slower to pass them along.  However, if bonds start to slip, rates could rise fast and lenders will worsen pricing even faster. -Victor Burek, Churchill Mortgage

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. 
  • 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.