Mortgage rates moved higher today as bond markets braced for impact from several upcoming events.  Bonds dictate rates, and as investor demand for bonds falls, rates rise.

Investors were faced with the challenge of bidding at an auction of 10yr Treasury notes today.  In an environment where the Treasury is ramping up issuance in order to pay for fiscal initiatives, buyers want to see lower and lower prices before committing.  Lower prices mean higher yields for investors and higher rates for consumers.  The 10yr auction ended up going fairly well, but only after rates had already moved higher in the morning.  In other words, the auction confirmed that rates needed to rise.

The other hurdle to clear will be tomorrow's Consumer Price Index--a key inflation report that can have an immediate impact on the bond market.  If inflation is lower than expected, rates could recover.  But if it's as strong as expected (or higher), rates could easily continue higher.   That would be unfortunate as today's rate sheets are very close to being the worst in more than 4 years, depending on the lender.

Loan Originator Perspective

I and my clients continue to favor locking.  2.95 continues to be a very strong floor or resistance.  Until that is broken, gonna lock as soon as possible. -Victor Burek, Churchill Mortgage

Pretty obvious at this point. Lock  as they come in.  -Al Hensling

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.