October 18, 2017
Mortgage rates moved modestly higher today despite bigger movement in underlying bond markets. In part, this is a byproduct of the way rates behaved at the end of last week, when lenders didn't adjust rates lower as quickly as bond market strength would have suggested. In short, rates are playing it closer to the vest while the bonds that underlie and inform rate movement have been a bit more volatile.
Bonds and rates frequently react to economic reports and other news that speaks to the health of the economy or the rate-setting policies of the Federal Reserve. Although we did have a key report on new home construction and several speakers from the Fed today, rates were preoccupied with less overt motivations. One example would be bond traders who decided to sell bonds today simply because trading levels hit certain targets.
All that having been said, motivations aren't as important to dissect until we move outside the range we've been in since late September. The next clear move outside that range (for better or worse) will be all the more meaningful because of the amount of time rates have been generally sideways and stable in the bigger picture.
Loan Originator Perspective
Rates rose today, as bonds broke the floor on recent ranges. We're not in a total upward rate spiral (yet), we're nearing Oct 6th's levels, which were the highest rates since mid-July. While the hope is we bounce back from today's hit, that's never guaranteed. I continue to be in "lock early" mode, just not enough momentum to want to float here. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 3.875-4.0%
- FHA/VA - 3.5%
- 15 YEAR FIXED - 3.25%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- 2017 has proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016. Most of the rate spike was done by the end of 2016 and we've generally moved sideways to lower since then
- The biggest question is whether or not this counter-intuitive trend has an expiration date. Rates haven't been immune from brief corrections back toward higher levels, and each correction causes concern that the good times are over.
- Despite those concerns, we've seen rates make new lows in April, June, and September. Although rates have been rising since early September, they'd have to move even higher before we'd consider a change in the bigger picture theme.
- All of the above having been said, past precedent suggests we're due for a much bigger dose of volatility some time soon.
- Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders. The rates generally assume little-to-no origination or discount except as noted when applicable. Rates appearing on this page are "effective rates" that take day-to-day changes in upfront costs into consideration.