December 11, 2017
Mortgage rates moved modestly higher for the 3rd straight business day, making for a moderate correction from the last Wednesday's 1-month lows. In the recent context, talking about "1-month lows" and 3-day losing streaks is actually far too dramatic when it comes to the actual movement in rates. Most prospective borrowers would be seeing the same rates as last week with the only differences being a slight adjustment in the upfront costs. Even then, many lenders are perfectly unchanged over the past 2 days. Point being: rate volatility has been calm with few exceptions.
Today's weakness (i.e. bond market weakness, which corresponds to higher rates) was driven by weak demand at today's 10yr Treasury auction. Mortgage rates aren't based directly on Treasuries, but the latter provide big-picture cues for nearly all domestic interest rates. Mortgages are no exception.
Investors are hesitant to let Treasuries run too far in either direction before seeing what the Federal Reserve has to say about its future rate hike outlook this Wednesday. Tax bill headlines are also a looming risk although we're not expecting any earth-shattering updates on that front this week.
Loan Originator Perspective
Bonds sold off Monday, as this week's Fed announcement and looming tax reform dampened demand. As of mid afternoon, only a few lenders worsened their morning rates, but that may change. At any rate, tomorrow's pricing looks to be worse than today's. I'm in "lock early" mode, the trend is not our friend now, and we'll need domestic or international drama to change that. -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.