November 20, 2017
Mortgage rates moved slightly higher today against the backdrop of the unique bond market conditions seen on Thanksgiving week. Bond markets underlie mortgage rates, and there's generally a certain level of participation that traders and mortgage lenders can count on. That participation wanes on major holiday weeks and the remaining players tend to behave a bit more conservatively. This is seen in the form of interest rates staying inside recent boundaries and mortgage lenders not getting too aggressive with pricing.
Inside those boundaries, however, movement is far less predictable. After all, with fewer players in the game, each trader has a bigger say in the direction rates will move. If there are more bonds being sold than bought, regardless of the motivation, rates will move higher. This was the case today. Things could just as easily go the opposite way tomorrow, but that's not the sort of thing to plan on. Considering that lenders will be less willing to offer lower rates if bond markets improve this week, both risks and rewards are muted when it comes to floating vs locking.
Bond markets and mortgage banks are closed on Thursday for Thanksgiving and lenders won't be issuing rate sheets. Friday is technically a half-day for bond markets, but availability of new rates and the ability to lock them varies widely. Many lenders simply republish the same rate sheets from the Wednesday before Thanksgiving.
Loan Originator Perspective
Its usually a tough call to lock on a holiday shortened week. If you do want to lock, i think today or tomorrow is the day. With the weakness we had this morning, I would be tempted to float over night and look at locking tomorrow. if your pricing today is similar to Friday or your lender reprices for the better later today, then I would go ahead and lock. -Victor Burek, Churchill Mortgage
I don't see much up side potential this week. We're in the lower half of the recent range and its a short week. Volume tends to dry up the closer you get to the holiday making the market more susceptible to larger swings in price/yield. Short term locking looks good. Longer term I see more bouncing between 2.2 and 2.4 until tax reform takes center stage. When it does, all bets are off. -Jason Anker - Sr. Loan Officer
The abridged Thanksgiving week bond market will likely be uneventful, if not comatose. I usually find pricing suffers slightly in these situations, as secondary desks are hesitant to price too aggressively prior to extended weekends. Bottom line, if locking this week, sooner is probably better. Happy (almost) Thanksgiving, all. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.0%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.375%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- 2017 had 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.
- While rates remain low in absolute terms, they've moved higher in a more threatening way heading into the 4th quarter, relative to the stability and improvement seen earlier in 2017
- The default stance for now is that this trend toward higher rates has the potential to continue. It will take more than a few great days here and there for that outlook to change.
- For weeks, this bullet point had warned about recent stability inviting a bigger dose of volatility. That volatility is now here. As such, locking is generally the better choice until the volatility is clearly dying down.
- 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.