December 20, 2016
Mortgage rates are officially checked out for the holidays. Today marked the third straight day with very little change from the previous day's rates, despite plenty of justification from market movement. This worked against us yesterday as markets suggested lower rates, but it worked in our favor today as bond markets were slightly weaker (bond weakness implies higher rates). In general, lenders have rates set a bit higher than they otherwise would be during a more active time of year, and thus don't need to worry about adjusting rates too much in either direction, unless markets make a much bigger move.
4.375% remains the most prevalent conventional 30yr fixed quote for top tier scenarios. Several lenders still up at 4.5%. The average effective rate is just a hair under the highest levels since April 2014.
Loan Originator Perspective
Short of some unexpected tape bomb, it will be extremely difficult for bonds to mount any kind of sizable rally that will lower rates. The trend continues to not be our friend. I am advising clients to lock as soon as they are able to as there appears to be no near term factor that makes floating worth the risk. -Victor Burek, Churchill Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.375-4.5%
- FHA/VA - 4.0%
- 15 YEAR FIXED - 3.375-3.5%
- 5 YEAR ARMS - 3.0 - 3.5% 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).