October 23, 2017
Mortgage rates were generally unchanged today despite slight improvements in underlying bond markets. As of last Friday, the average lender was quoting rates at or near the highest levels in more than 2 months, meaning today earns the same dubious distinction. The saving grace is that in relative terms, the past 2-3 months have been historically less volatile than normal, and conventional 30yr fixed rates at 4% (or just under) are still widely available for top tier scenarios.
Today was light in terms of economic data and political events to inspire movement in rates, but that could change at any moment. President Trump told reporters that he is "very very close" to selecting the next Chair of the Federal Reserve (Yellen does not seem to be in the running based on his choice of words). Markets will likely react to the decision whenever it becomes known. Traders are currently trying to split the difference between the top 2 choices (Powell and Taylor), and are ready to push rates higher or lower depending on the outcome.
All other things being equal, the trend in rates has been generally higher for more than a month now. Floating doesn't tend to make as much sense in that environment, but that could quickly change if the Fed Chair news is helpful or simply if rates can avoid any additional weakness beyond what we say last Friday.
Loan Originator Perspective
I am not seeing any benefit to floating right now. It seems anytime bonds try to rally, sellers step in to take profits. Republicans seem like they may be able to pass some tax reform which is also net negative for bonds. Until further notice, i think locking is the way to go. -Victor Burek, Churchill Mortgage
So we’ve run back up to the highest levels on the 10 year Treasury Bond in the last 3 months. A bit scary. But the good news is we are still under 2.40%. So where do we go from here? Good question. If closing soon locking protects you. If you aren’t closing for a while it may be worth it to float, very cautiously, to see what happens. If we break 2.40 lock, but if not see where we go. But either way keep your loan officer on speed dial in the meantime in case you need to lock STAT. -Jeff Anderson, Loan Officer, Salem Five Mortgage, LLC
Today's Most Prevalent Rates
- 30YR FIXED - 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.