December 23, 2016
Mortgage rates made their biggest move of the week today, although the competition wasn't very stiff, considering yesterday's microscopic improvement was the first noticeable change. Today's improvement was certainly bigger, but still microscopic by normal standards. Few, if any lenders will be quoting lower "contract rates" today. The gains would instead be seen in the form of slightly lower closing costs.
As for the contract rates themselves, 4.375% remains the most prevalent conventional 30yr fixed quote for top tier scenarios. Several lenders still up at 4.5% and a few are down at 4.25%. Barring the unforeseen, lenders will have little incentive to make meaningful adjustments to rates between now and the end of the year, thus decreasing the risk and reward associated with a "lock vs float" decision.
Bond markets close early today and will be fully closed on Monday in observance of Christmas. As such, lenders won't be updating rate sheets again until next Tuesday. Between now and then, Merry Christmas and Happy Holidays to you and yours!
Loan Originator Perspective
Very limited participation, an early close, and markets don't resume until Tuesday. If you're rate is within striking distance, I recommend locking through the holiday weekend, albeit it is unlikely we see much action next week. The concern is that we have been in an upward cycle fueled by a euphoric driven trade on conceptual future economic growth that has yet to be confirmed. Unfortunately until this is either confirmed or revealed as a farce, the euphoria will continue to power the markets current momentum. Defense is the best approach. Keep in mind to take an extended rate lock period due to the holiday lag. Ho-Ho-Ho. -Gus Floropoulos, VP, The Federal Savings Bank
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).