Mortgage rates haven't necessarily moved higher every day recently. For instance, yesterday's rates were unchanged versus last Friday's. But the general trend has unquestionably been toward higher rates. In fact, rates have only moved lower on 3 out of the past 15 business days.
While that sort of losing streak sounds fairly unpleasant, the size of the movement has been far from threatening. Over that same 15 business day time frame, the average effective rate has only moved up 0.11%.
Translated to actual "note rates" (the rate applied to your loan balance, without adjusting for upfront finance charges), we're talking about top tier borrowers moving up from 4.0% to 4.125% on average. Some of the more aggressive lenders continue to quote 4.0% while a few of the less aggressive lenders have moved up to 4.25% from 4.125%.
To repeat yesterday's assessment of lock/float risks: we'd like to see a departure from the aforementioned trend before anything other than a conservative, lock-biased approach makes sense.
Loan Originator Perspective
Bond markets' slow but steady declines continued today, and mortgage pricing worsened again. We're now at the highest treasury yields since the end of March, and lowest MBS prices in a month (lower prices means higher rates). As I said yesterday, bond markets have scant reason to improve as long as stocks soar and there's no catastrophic geopolitical strife looming. There's ample logic for locking, and virtually none for floating. Until that changes, I'm locking sooner rather than later. -Ted Rood, Senior Originator
The trend continues to not be our friend. My clients are most definitely favoring locking once within 30 days of closing. Until bonds find some support, I will continue to advise locking. -Victor Burek, Churchill Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.125%
- FHA/VA - 3.75 - 4.0%
- 15 YEAR FIXED - 3.375%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- Investors were relatively convinced that the decades-long trend toward lower rates had been permanently reversed after Trump became president, but such a conclusion would require YEARS to truly confirm
- Instead of continuing higher in 2017, rates instead formed a narrow, sideways range, and held inside until April. Investor perceptions are shifting such that fiscal reforms and other policy developments will need to live up to expectations in order to push rates higher. Geopolitical risks would also need to avoid flaring up (more than they already have)
- For the first time since the election, we're in a rate environment where you wouldn't be crazy not to lock at every little opportunity/improvement. Until/unless it's broken, the highest rates of early-2017 mark the ceiling, and we're now waiting to see how much lower we can go from here.
- 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.