January 12, 2017
Mortgage rates were mixed today, depending on the lender. Discrepancies between lenders have been higher than normal over the last 24 hours for several reasons. This began yesterday when bond markets improved enough for many (but not all) lenders to offer mid-day rate sheet improvements. Some were more aggressive than others in that regard. When bond markets (which dictate rates) opened in stronger territory today, those lenders had more ground to cover and thus began the day with bigger improvements compared to yesterday's latest levels.
Regardless of the day-over-day change, all lenders were in better shape this morning. Average rates were easily the lowest since Nov 17th, but that didn't hold true for all lenders by the afternoon. Bond markets weakened after the 30yr Bond auction and multiple mortgage companies issued negative reprices (i.e. they increased rates/cost). Lenders who didn't reprice are generally those who offered smaller improvements this morning, or who simply reprice less than average. Such lenders should be expected to offer higher rates tomorrow, all other things being equal.
4.125% is still the most prevalent conventional 30yr fixed rate on top tier scenarios, with today's losses seen in the form of higher upfront costs. In other words, "effective rates" (which take closing costs into consideration) are higher while "note rates" (which is just the rate applied to your mortgage balance) are generally unchanged.
Loan Originator Perspective
All new supply of Treasuries are out of the way now. Some early indicators I have read are showing that tomorrow’s retail sales data may be weaker which could benefit rates further. With the 10 year holding below 2.34, I would continue to float over night to see if we can extend the gains. -Victor Burek, Churchill Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.125%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.25-3.375%
- 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 return to pre-election levels until well after Trump takes office. Rates can move for other reasons, but it would take something big and unexpected for rates to get back to pre-election levels.
- 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. The beginning of 2017 may be bringing such a push, but there's no telling how long it will last.
- 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).