Mortgage rates fell by a modest amount today. It was fairly inconsequential in the bigger picture, but could save some prospective borrowers a few dollars of upfront fees. If you're in a position to decide on locking your loan this afternoon, be aware that tomorrow brings the important jobs report (nonfarm payrolls and the unemployment rate are released) which can have a bigger impact on rates than other economic reports.
Despite today's modest improvement, rates have been trending higher fairly consistently since breaking out of a sideways range on July 19th. But notably, current rates aren't that much higher than they were late last week. In contrast, Freddie Mac's widely-cited weekly rate survey says rates are 0.06% higher. That's actually fairly outrageous. For instance, one of the biggest lenders out there has today's 30yr fixed costing 0.059%, or $59 for every $100,000 financed. This equates to an implied move in interest rates of less than 0.01%. In other words, if you were being quoted 4.75% last week, your effective rate would still be just under 4.76% this week. Even then, lenders generally only offer rates in 0.125% increments, so the true change would instead be measured in terms of upfront costs (that's where $59 per 100k borrowed comes in).
Loan Originator Perspective
Bonds posted small gains today, while still remaining near their worst levels since May. My pricing was virtually identical to yesterday's. July's NFP jobs report hits tomorrow, and it would take a huge miss to break rates' upward trend. I'm not about to bet on that, will continue locking early. -Ted Rood, Senior Originator
Tomorrow brings us non farm payrolls which always has the ability to move the markets. At this point, even if an ugly report showing less jobs, i doubt we will see a large move in the bond markets to better rates. So, more to lose than to gain, so lock today ahead of non farm payrolls. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.625-4.75
- FHA/VA - 4.25-4.5%
- 15 YEAR FIXED - 4.125%
- 5 YEAR ARMS - 3.75-4.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates moved higher in a serious way due to several big-picture headwinds, including: the Fed's rate hike outlook (and general policy tightening), 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.
- Despite those headwinds, the upward momentum in rates has cooled off heading into the summer months. This could merely be the eye of the storm, or it could end up being the moment where markets began to doubt that prevailing trends would continue.
- It makes sense to remain defensive (i.e. generally more lock-biased) because the headwinds mentioned above won't die down quickly. Temporary corrections can be explained away, but it will take a big change in economic fundamentals or geopolitical risk for the big picture to change. While that doesn't necessarily mean rates have to skyrocket, there's a good chance it means rates will struggle to move much lower than early 2018 lows until more convincing motivation shows up.
- 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.