In and of itself, today wasn't too bad of a day. Mortgage Rates were only slightly higher, and were generally unfazed by the release of the Minutes from the most recent Fed meeting.  Market participants were concerned about the Minutes making a clearer case for a rate hike at the next meeting.  Ultimately, the Minutes didn't tell us anything we didn't already know and bond markets (which dictate mortgage rates) improved.  

Now for the unfortunate aspects of the day!  When we consider today in the context of the past 9 days, we see that it prolongs a depressingly long losing streak.  Mortgage rates haven't moved lower since September 27th.  Moreover, they're roughly a quarter point higher since then!  As for today's bond market improvements, they were merely enough to get bonds back near yesterday's latest levels, due to significant overnight weakness.  In other words, bonds lost more ground overnight and this morning than they were able to gain back this afternoon.  

3.625% is now the most prevalent conventional 30yr fixed quote  on top tier scenarios, but several lenders remain at 3.5%.  To repeat the common refrain over the past 2 weeks: this trend is not your friend.   It's not safe to assume things will turn around until we have concrete evidence to that effect.

Loan Originator Perspective

Following the FOMC minutes release, bonds are managing to rally some.  Today’s move is giving me some hope that the selling might be over.  Not sure we will see large improvements in the coming days, but I think it would be worth it to float overnight and evaluate pricing in the morning.    -Victor Burek, Churchill Mortgage

The FOMC minutes hadn't been released at press time, but it's highly likely they'll confirm what markets have already shown:  Domestic economic growth has strengthened, and Fed members are becoming more willing to hike rates.  MBS have lost 100 bps since Sept 26th, which easily translates into mortgage interest rate increases of .25% or more.  This is not a time to "hope" for something to break the current trend to higher rates, it's time to play defense, and folks who aren't locked are losing ground daily.  Until proven otherwise, higher rates are what to expect, act accordingly. -Ted Rood, Senior Originator

Today's Best-Execution Rates

  • 30YR FIXED - 3.5-3.625%
  • FHA/VA - 3.25%
  • 15 YEAR FIXED - 2.75-2.875%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • In the biggest of pictures, "global growth concerns" remain the driving force behind the long-term trend toward lower rates
  • Amid that trend, periodic corrections toward higher rates can and will happen.  These can happen for no apparent reason, or they can be brought on by changes in expectations surrounding central bank policy at home and abroad, as well as geopolitical and systemic risks

  • Time horizon and risk tolerance are 2 variables to consider when it comes to locking.  If you have plenty of time and don't mind losing some ground, set a limit as to how much higher rates could go before you'd lock to avoid further losses, and then float in the hopes of never seeing that limit.
  • In the shorter-term, it's always good to look for lock opportunities after rates have been moving lower or sideways repeatedly, especially if they've since begun to move back up in any sort of consistent way. 
  • As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.'  Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy.  It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).