November 21, 2016
Mortgage rates called in sick today, effectively doing nothing to move higher or lower from last Friday, on average. For the record, that means some lenders will have improved just slightly while others are in slightly worse shape. In all cases, the movement is relatively small. Average rates remain at the highest levels since July 2015 with 4.125% being the most prevalent conventional 30yr fixed quote on top tier scenarios.
It continues to be the case that the financial world must wait for one of two things before rates have a chance of moving back into the mid 3's. We'd either need to see some big shock or we'll simply have to wait for clarity on Trump's policy path. If you're not sure why I'm talking about Trump's policy path with respect to mortgage rates, these three articles contain the relevant recaps:
(11/9/2016) Worst Day For Mortgage Rates in Over 3 Years
(11/10/2016) Mortgage Rate Pain on Par With Taper Tantrum
(11/14/2016) Mortgage Rates Skyrocket to 4%. New Normal?
Loan Originator Perspective
Two things; 1, what you should do and 2, what you should hope for. As for 1, you should play defense. If you need to lock a rate do so, don’t worry about what tomorrow’s rate might be just do it. This sell off is like a stampeding bull, it will eventually stop but are you willing guess when and where? Probably not. If you are then feel free to stand in front of it, I’ll call the paramedics in advance. As for 2, you can hope (I know I am) that we close under 2.3 – 2.4 on the 10 year. That’s highest level we’ve seen in a year. If we can do that then there is hope we’ve seen the end of this run and rates will improve. Hope is not a strategy. -Jason B. Anker, Vice President- Loan Officer at Salem Five
Pricing improved marginally today, but the gains were insignificant compared with our recent losses. Even if the last two weeks' rate hikes prove to be an overreaction to Trump's future fiscal policy, it will be quite some time before we regain prior pricing levels. I'm still in lock early mode; I'd rather miss a small prospective gain than risk larger prospective losses. Until the trend reverses, play it safe and lock, unless you really enjoy adrenaline and risk.-Ted Rood, Senior Originator
Easy advice right now…lock if within 30 days of closing. It’s a holiday week, and short of an unexpected tape bomb, I do not see rates improving in the short term. More risk of a drift higher then a move lower. -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
- Rates have generally been trending higher since hitting all-time lows in early July, and exploded higher following the presidential election
- Clearly-defined uptrends provide higher-than-average motivation to lock, especially when the pace of rising rates accelerates quickly
- Risk-takers can try to time the dips in rates that may occur during that broader uptrend, but the reward for good timing generally isn't worth the risk in these situations
- We'd need to see a sustained push back toward lower rates (something that lasts more than 1-3 days) before anything less than a cautious, lock-biased approach makes sense for all but the most risk-tolerant borrowers.
- 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).