January 27, 2017
Mortgage rates fell today, undoing enough of this week's damage to return precisely to levels seen last Friday. In simpler terms, rates ended the week 'unchanged.' That's not for lack of volatility during the week! 4 out of the 5 days saw bigger-than-average moves. Tuesday and Wednesday alone pushed rates more than an eighth of a point higher. But Friday and Monday's improvements were enough to offset the weakness.
Rates benefited from this morning's economic data. Specifically, the first reading on Q4 GDP was weaker than expected. Weaker economic data tends to push rates and stock prices lower.
4.25% remains the most prevalent quote on top tier conventional 30yr fixed scenarios. That means today's improvements are more likely to be seen in the form of lower upfront costs (or a higher lender credit, depending on the scenario). That said, a few lenders did move back down to 4.125%. Several more lenders moved back to 4.25% from 4.375%.
Loan Originator Perspective
A surprise miss on GDP sent rates lower on the day. Overall a good shift on treasuries that isn't reflected in mortgage rates today. I would need to see a few more days like today to feel optimistic enough not to lock, even on a Friday. Locking is still the best option for all purchase loans with a 30 day horizon to close. On a positive note, if we start to reverse course from here, it could be a good sign as we never tested 2.60+ on the 10 Year Treasury during the recent sell-off. -Gus Floropoulos, VP, The Federal Savings Bank
Another day in (on?) the range. We’re trickling toward 2.45 which is my personal over under mark for locking. I’d personally float till Monday with an eye on pre-market data. If it’s negative then hopefully you have overnight protect and you can lock up floaters. The more likely scenario I think is sub 2.45 Monday. -Jason B. Anker, Vice President- Loan Officer at Salem Five
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).