December 20, 2017
Mortgage rates continued higher today, largely due to momentum in bond markets (which dictate rates) carrying over from yesterday. Trading was far less active today and the movement was much smaller. Even so, any amount of additional weakness would have been enough to confirm a shift in what had been an exceptionally flat rate range over the past 3 months.
The average lender has moved an eighth of percentage point (.125%) higher in rate over the past 2 days, leaving them right in line with late October's levels. Unfortunately late October marked a brief period of highs rates, and you'd have to go back to early July to see anything similar. On a final, downbeat note, we haven't seen conclusively higher rates since May 2017.
As we discussed yesterday, bond markets are making these moves for their own reasons, without regard for the Tax bill that passed it's re-vote in the House today (and the Senate's first and only vote overnight). To be clear, the tax bill has been a big deal for rates--just not over the past 2 days. The fact that its passage aligns with market volatility is utter coincidence.
There's always a bit of uncertainty when it comes to market movement in the 2nd half of December. Markets won't really be firing on all cylinders until the 2nd week of January. All we can know for now is that a sideways trend has given way to new trend toward higher rates. It will take significant improvements before abandoning that outlook. As such, floating one's rate makes even less sense than it did before.
Loan Originator Perspective
Bond markets continued yesterday's sell-off, albeit at a slower pace today. As year end nears, seems quite apparent that investment firms are rotating into stocks at bonds' expense. I don't foresee a quick bond bounce back, time to play defense and lock sooner, rather than later. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.125%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.375%-3.5%
- 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.