Mortgage rates were flat to slightly higher today, depending on the lender. The average lender was quoting the same rates as yesterday, but with slightly higher upfront costs (or a lower credit, depending on your scenario). That said, if you could only choose one word to describe the movement, it would be "flat."
The flat trajectory has been intact for 3 straight days, even though today's events had enough street cred to cause a shift in momentum. The morning hours brought an important economic report and an even more important update on the Treasury's borrowing needs. Rates care about Treasury issuance because it's the foundation of the "supply" side of the supply/demand equation for bonds (and bonds dictate rates). Rates care about economic data because a stronger economy can generally support higher rates and it also increases pressure on the Fed to buy fewer bonds (reducing that "demand" side of the equation) or to hike its policy rate.
In today's case, neither the economic data nor the Treasury's announcement were outside the bounds of investors' expectations. The last chance for any high drama arrived with the 2pm Fed Announcement. Investors already knew the Fed wasn't planning on changing rates (or anything else) today, but there's always some curiosity surrounding their choice of words. Today's announcement was right down the middle, and rates were consequently unmoved, for better or worse.
Potential volatility remains in play tomorrow and the next day, with more economic data, including the important jobs report on Friday morning.
Loan Originator Perspective
Today's Fed Policy Statement was unremarkable (as they typically are) and rates were flat today. 10 year yields seem quite content at 2.97%. I don't see any rallies looming, nor imminent sell-offs. I'll keep locking loans within 30 days of closing, will consider floating those with more time before closing. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.625%-4.75%
- FHA/VA - 4.25%-4.5%
- 15 YEAR FIXED - 4.0%
- 5 YEAR ARMS - 3.625%-3.875% 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've been moving higher in a serious way due to headwinds that cannot be quickly defeated. These include the Fed's increasingly restrictive monetary policy outlook, the increased amount of Treasury issuance to pay for the tax bill (higher bond issuance = higher rates), and the possibility that fiscal stimulus results in higher growth/inflation.
- While we may see periodic corrections to the broader trend toward higher rates, it's safer to assume that broader trend can and will continue. Until that changes, it makes much more sense to remain heavily-biased toward locking as opposed to floating.
- 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.