February 24, 2017
Mortgage rates moved lower for 3rd straight day (and the 5th time in the past 6 days). That makes this the best winning streak of the year and it brings rates to the lowest levels of the year (matching February 8th and a few days in early January). From here, you'd have to go back to mid-November 2016 to see appreciably lower rates.
All that having been said, the range over that time has been fairly narrow--4.125%-4.375% for top tier conventional 30yr fixed rate quotes. Naturally, today's average lender is at 4.125% although some of the more aggressive lenders are indeed down to 4.0%. No matter the rate quoted, the important point is that today's rates are noticeably lower than yesterday's. Even if the NOTE rate is the same, the upfront costs should be lower (thus making for a lower EFFECTIVE rate).
In terms of lock/float strategy, the longer these winning streaks go, the more likely they are to run into resistance. Granted, the range will break at some point, and it's an acceptable strategy to float and hope this is when we see a break. But if you're playing the range, it's a good time to lock.
Loan Originator Perspective
Bond markets continued testing the floors of our recent range today, and mortgage pricing improved slightly. The end of a month typically generates some demand for bonds, which may explain today's action. 10 year treasury yields are nearing 2.30%, the best levels since the end of November. I'm almost believing this rally has legs, floating may be a viable option for those with some risk tolerance. Closing within 15 days? I'd grab the money and lock to avoid any losses next week. -Ted Rood, Senior Originator
Mortgage backed securities are managing quite the rally over the last couple days. We are currently at 1 month highs. Lenders have passed along much of the gains but I still think there is cushion there. If you are happy with today’s pricing, nothing wrong with locking in these recent gains, but I think floating over the weekend might be worth the risk. Plus, I am never a fan of locking on Fridays. -Victor Burek, Churchill Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.125-4.25%
- FHA/VA - 3.75-4.25%
- 15 YEAR FIXED - 3.375-3.5%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates had been trending higher since hitting all-time lows in early July, and exploded higher following the presidential election
- Some investors are increasingly worried/convinced that the decades-long trend toward lower rates has been permanently reversed, but such a conclusion would require YEARS to truly confirm
- With the incoming administration's policies driving a large portion of upward rate momentum, mortgage rates will be hard-pressed to return to pre-election levels until well after Trump takes office. Rates can move for other reasons, but it would take something big and unexpected for rates to get back to pre-election levels.
- We'd need to see a sustained push back toward lower rates (something that lasts more than 3 days) before anything less than a cautious, lock-biased approach makes sense for all but the most risk-tolerant borrowers.
- As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.' Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy. It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).