December 21, 2017
Mortgage rates edged just slightly higher again today, capping the sharpest 3-day increase since late June and leaving the average lender more than an eighth of a percentage point higher than they were on Monday. While an eighth of a point may have been a fairly typical "big week" in previous years, it's been uncommon in 2017--especially since the range of rates began to narrow at the end of October.
Today's weakness in mortgage rates--although small--is at odds with slight improvements in bond markets (which underlie rates). Part of the reason is timing. Bonds weakened into the afternoon yesterday, but few lenders adjusted rate sheets accordingly. That means they began today at a relative disadvantage--one that's reflected in the rate sheet changes.
The average lender is now quoting conventional 30yr fixe rates of 4.125% compared to 4.0% on Monday. The underlying improvements in bond markets suggest that the worst may be over for this week's rate spike, but it still makes more sense to be cautious as opposed to aggressive with respect to locking and floating. In any event, tomorrow is only a half-day for bond markets, meaning rate sheets will err on the conservative side (i.e. lenders won't be eager to offer significantly lower rates). Bond markets and mortgage lenders are, of course, close on Monday for Christmas.
Loan Originator Perspective
Bond markets were fairly flat today, but the damage has been done. As we ease into Christmas/New Year's weeks, market participation will be limited at best, leaving limited potential for meaningful rallies. Anyone closing within 30 days definitely needs to be locking, unless they have a huge penchant for risk. -Ted Rood, Senior Originator
Rate sheets have been hammered over the last couple days following the bond sell off. It appears to me that secondary departments have worsened sheets more than the price drop justifies. At this point, if i was not locked, i would look to float until Tuesday of next week. Most traders have already clocked out for the holiday weekend since tomorrow is a short trading day. -Victor Burek, Churchill Mortgage
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.