As of yesterday, it looked like mortgage rates would be more interested in staying in a narrow, sideways range for the holiday-shortened Spring Break/Good Friday trading week. Today, financial markets gave us a reminder about how much reality can differ from apparently probable outcomes. Fortunately, the surprises work in the favor of the mortgage market today as rates are sharply lower (at least in the context of the recent range, which has been extremely narrow).
Bonds (which underlie rates) drew motivation from a combination of factors today. These included compulsory trades that had to be made by the end of the month, automatic trades made in response to certain lines in the sand, and safe-haven trades resulting from the massive losses in the stock market. The net effect for the average mortgage borrower is a noticeable improvement in upfront costs at the very least (for instance, a quoted rate may be the same as yesterday, but the associated closing costs would be lower).
In other cases, the rate itself could be an eighth of a percentage point lower, although in those cases, the drop in rate would likely be offset, in part, by a slight increase in upfront costs. If we derive an "effective rate" from the combination of the two, today's drop is equivalent to 0.04% for the average lender.
Loan Originator Perspective
Bond yields bounced lower today, finally cracking the previously impenetrable 2.8% barrier. While the rally is "just one day" in a short trading week, it progressed throughout the day, which is encouraging. While it's far too early to call this a trend, I'm willing to see where it leads, and will float new applications overnight. -Ted Rood, Senior Originator
Bonds are trying again to break the 2.80 level in 10yr Treasuries. For those that are risk tolerant, you could probably float overnight but my clients and I are still favoring locking. -Victor Burek, Churchill Mortgage
With Good Friday upon us and the shortened trading week Good Tuesday seems like a Good Time to take advantage of the modest improvement in Rates. -Al Hensling, Mortgage Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.5%
- FHA/VA - 4.375%
- 15 YEAR FIXED - 3.875%
- 5 YEAR ARMS - 3.5-3.75% depending on the lender
Ongoing Lock/Float Considerations
- 2017 had proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016.
- While rates remain low in absolute terms, they moved higher in a more threatening way heading into the beginning of 2018
- The scariest part of the move higher looks like it ended as of early February, and rates have been generally sideways since then
- Even so, the potential remains for more weakness (i.e. higher rates). It makes more sense to remain defensive (i.e. more inclined to lock) until we've seen a more convincing shift lower.
- 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.