October 25, 2017
Mortgage rates continued higher at a relatively fast pace today, pushing farther into the highest levels since early July. As of this afternoon, the average lender is right in line with those rate offerings from July. Any higher and we'd have to go back another 2 months to see comparable rates.
While we had been able to say that the volatility of the past few weeks hadn't yet created an eighth of a percentage point spike in 30yr fixed rates, that definitively changed today. In fact, for many lenders, the cost of offering a 30yr fixed rate of 3.875% last week now matches the cost of a 4.0% rate this week. Clients who'd seen quotes of 4.0% are now seeing 4.125%. The average is somewhere in between for top tier scenarios.
There are several major flashpoints in the coming days that could help or hurt. Until we can be certain they're helping, it makes more sense to be defensive in these situations when it comes to locking vs floating. The first event happens tomorrow morning with the policy announcement from the European Central Bank. If rates in global bond markets happen to be surging lower after that, the outlook for a broader bounce in mortgage rates would improve.
Loan Originator Perspective
Topsy-turvy day in bond markets, as pronounced morning weakness waned by mid PM. We still lost ground, but many lenders issued "less worse" rates in the afternoon. It's far too early to call this the end of bonds' losses, but it's slightly encouraging, which beats completely dismal. Been saying lock early, today's no different. Better be prepared to lose if you float, 'cause that's the most likely outcome, for the moment. -Ted Rood, Senior Originator
Tough decision today. The trend continues to not be the friend of lower rates. Bonds opened much weaker this morning resulting higher lender costs. Since then, bonds have managed to rally and many lenders have repriced for the better. If your lender hasn't repriced, then i would consider floating overnight. If they have and if your pricing is similar to yesterday, then i would lock. Rates sheets i have seen show pricing to be worse than yesterday even after the reprices. As always, only those than can tolerate and afford the risk should consider floating. -Victor Burek, Churchill Mortgage
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.