December 28, 2017
Mortgage rates were broadly unchanged today, despite negative cues from underlying bond markets. In other words, the bonds that account for most mortgage rate movement suggested higher rates--at least if you're comparing today against yesterday's latest levels.
The catch is that yesterday's mortgage rate sheets weren't based on the "latest levels." Bonds improved all day, and fairly substantially at that! Lenders offered lower rates in the afternoon, but they only make those adjustments once or twice on any given day (they prefer not to make them at all). As such, bonds continued to improve after the early afternoon glut of new lender rate sheets.
With all of the above in mind, it's easier to reconcile today's seemingly paradoxical strength. Indeed, current bond market trading levels are right in line with the levels seen during yesterday's mortgage lender rate sheet changes. In other words, we're right where we should be.
Loan Originator Perspective
While not convincingly holding below 2.42 on the 10 year is slightly concerning, without a convincing move higher in yield on the 10 year, I am advising my clients to cautiously float through the weekend as trading volume will be almost non-existent tomorrow and with Monday being a Holiday. I think locking today unless a move justifies it is almost like giving away 4 days of the time frame of the lock. -Steve Chizmadia, Loan Advisor, Worldwide Credit Corporation
Today's Most Prevalent Rates
- 30YR FIXED - 4.0%-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.