December 8, 2017
Mortgage rates moved modestly higher today, although some lenders were right in line with yesterday's levels (especially those who raised rates in response to market weakness yesterday afternoon). Either way, today's rates are pretty darn close to yesterday's and very much inside the recent range.
The Labor Department announced that 228k new jobs were created in November, stronger than the median forecast of 200k. These so-called "nonfarm payrolls" add up to the most widely followed metric on the health of the labor market in the US. On most other occasions, the report would create a more meaningful response in rates (which tend to rise when jobs growth is strong). In the current case, market participants are more interested to see how various legislative efforts develop--especially the tax bill.
Part of yesterday's bond market weakness had to do with bipartisan efforts to avert a government shutdown. Another temporary bill was signed by Trump today which funds the government for another 2 weeks. Rates responded by leveling-off just above yesterday's highs.
The movement wasn't enough to change actual interest rate quotes on mortgages (i.e. "NOTE rates"). Instead, changes would be seen in the form of higher closing costs for the same rates quoted yesterday.
Loan Originator Perspective
Bonds' brief rally ended yesterday, and we returned to recent ranges today. It appears we're back to treading water, which means it's time to play defense. I'm locking all applications within 30 days of closing, and examining those within 45 to see if the potential benefits of floating merits clients' risk tolerance. -Ted Rood, Senior Originator
I am not a fan of locking on Fridays, so i personally favor floating over the weekend. Most of my clients chose to lock earlier this week which in hindsight appears to have been wise, but pricing is not much worse today. As always, if you are happy with the quote, lock and move on. Not sure you will gain much by floating. -Victor Burek, Churchill Mortgage
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.