November 25, 2016
Mortgage rates were unchanged-to-slightly-higher today, depending on the lender. Most lenders put out rate sheets in fairly conservative territory on Wednesday for the express purpose of not needing to mess with them too much today. With the Friday after Thanksgiving being an early close for bond markets, lenders tend to check in once in the morning to set rates high enough that they won't be forced to issue "reprices" (mid-day rate sheet changes) on that off chance of market volatility.
That was the case today, as a mid-morning swoon in bond prices--that normally would have seen a few lenders raise rates--instead passed without leaving a trace. Unfortunately, the absence of movement means rates continue to operate at the highest levels since June 2015. And in some cases, rates are as high as they've been in more than 2 years. The most prevalently-quoted conventional 30yr fixed rate remain 4.125-4.25% on top tier scenarios.
Current rates likely represent something of a "new normal," because bond markets (which drive rates) quickly moved to account for a potential future increase in growth and inflation under the Trump administration. For more on how this massive rate spike played out, here are 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?
Today's Best-Execution Rates
- 30YR FIXED - 4.125%-4.25%
- 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 had been trending higher since hitting all-time lows in early July, and exploded higher following the presidential election
- Some investors are increasingly worried/convinced that the decades-long trend toward lower rates has been permanently reversed, but such a conclusion would require YEARS to truly confirm
- With the incoming administration's policies driving a large portion of upward rate momentum, mortgage rates will be hard-pressed to make significant improvements until after Trump takes office. Rates can move for other reasons, but it would take something big and unexpected for rates to move appreciably lower.
- We'd need to see a sustained push back toward lower rates (something that lasts more than 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).