January 4, 2017
Mortgage rates were slightly higher today, on average, but some lenders were unchanged from yesterday. Others were quoting higher rates in the morning and then issued positive reprices in the afternoon (i.e. mid-day improvements), bringing them back in line with the rest of the pack. In the slightly bigger picture, rates remain closer to 4 week lows. Since Dec 8th, only yesterday was any better.
4.25% remains the most prevalent conventional 30yr fixed quote on top tier scenarios. Some of the more aggressive lenders are still down at 4.125% and a few haven't made it down from 4.375% yet. Compared to yesterday, today's movement would only be seen in the form of slightly higher upfront costs (as opposed to in the "note rate" itself).
With 2 days down, 2017 is shaping up to be less threatening than it might have been, considering the market movement at the end of 2016. But to whatever degree we have NOT seen anything too troubling so far this week, neither have we seen solid cause for celebration. In short, rates are in a holding pattern--albeit at an altitude with slightly more oxygen.
Loan Originator Perspective
Bond markets seem to be planting their heels in the mid 2's on the 10 YR bond. It is good news to see rates hold steady here , but we can't assume this is a firm ceiling yet. We will have to wait to see what the next couple of days of data brings to the table. Locking continues to be the only option for now. We have seen dramatic spikes higher in mortgage rates too frequently since the election to be taking risks just yet. -Gus Floropoulos, VP, The Federal Savings Bank
Bonds sold off slightly today, as traders looked to Friday's NFP jobs report. There's still no definitive trend here, and I don't see the potential for meaningful pricing improvement until we get some bearish economic data. The smart move (to me) remains locking early. Floating COULD yield some small gains, but likely not enough to justify the risk for all but the most risk tolerant clients. -Ted Rood, Senior Originator
Today's Best-Execution Rates
- 30YR FIXED - 4.125-4.25%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.375%
- 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).