January 23, 2017
Mortgage rates fell somewhat significantly today, fully offsetting last week's rise. Specifically, today's average rates are back in line with those seen on Friday, January 23rd (keep in mind, however, that rates were slightly lower last Tuesday before moving appreciably higher through the course of the week).
Bond markets (which dictate mortgage rate movement) were tuned in to today's raft of headlines concerning Trump's opening salvo of policy announcements. While specific details remain elusive, markets reacted primarily to trade-related news (i.e. border-tax). This pushed stocks and bond yields lower. Lower yields equate to lower rates. Indeed, as markets shifted throughout the morning, lenders were able to revise mortgage rates lower in the middle of the day.
4.125% is back in play, now sharing relatively equal territory with 4.25% as the two most prevalently-quoted conventional 30yr fixed rates on top tier scenarios.
Loan Originator Perspective
Starting the week off with a great rally following last weeks selling is a breath of fresh air. We have found ourselves right in the middle of the previous range. Some may be tempted to ride this momentum further, I would say it is wise to lock in any gains we see. Until a definite confirmation breaking below the range has occurred, I do not see the incentive to float. Loans on a 30 day window should take advantage of today's improvement. -Gus Floropoulos, VP, The Federal Savings Bank
Bonds posted moderate gains today, and mortgage pricing improved slightly, while (of course) remaining within recent ranges. The big unknown is how President Trump's fiscal policies will influence inflation, wage growth, and economic output. We won't get answers to those questions this week; there's sparse data to inform rate markets. It's highly likely we'll see limited movement until next week's Fed announcement. Many lenders did reprice better throughout the day on Monday, if you're locking today, wait until later in the day to see if your pricing improves. -Ted Rood, Senior Originator
Today's Best-Execution Rates
- 30YR FIXED - 4.25%
- FHA/VA - 3.75%
- 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 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.
- 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).