March 23, 2017
Mortgage rates were slightly higher for the first time in 8 days as markets braced for the impact of political developments. The big issue of the day was (and still is) the healthcare bill set to be debated in the House of Representatives tonight.
In general, if the bill is passed, investors will be more keen to believe in the viability of other legislation more germane to financial markets (like tax cuts, other stimulus, and regulatory reform). Those "other" policy points were key reasons for the sharp move higher in rates at the end of 2016. If confidence increases, it could put the same pressure back on rates. But if investors lose confidence in the policy potential, stocks and bonds would have more motivation to move lower (as they've both been doing for the past 2 weeks).
As of yesterday, the healthcare vote was tentatively scheduled for tonight. The most recent news suggests that the vote will not be held until tomorrow morning. It continues to be the case that the vote is a focal point for volatility. Because we can't be sure of much of anything when it comes to political posturing, financial markets are ready to move in either direction from here and likely with more momentum than we've seen in the past few days.
The average lender is quoting conventional 30yr fixed rates of 4.25% on top tier scenarios. Some lenders are as low as 4.125%, and a few remain at 4.375%.
Loan Originator Perspectives
Bonds gave back a portion of their prior gains today, amid continued uncertainty over the direction of US fiscal policy and health care reform. Our rally feels pretty stressed at this point, think it's time to grab the gains and lock some floating deals. We could post further improvements, but that would likely take more dysfunction than we have now. Short term, think we're near our low on rates. Long term remains to be seen. -Ted Rood, Senior Originator
Today's Best-Execution Rates
- 30YR FIXED - 4.25%
- FHA/VA - 4.0-4.25%
- 15 YEAR FIXED - 3.5-3.625%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- 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
- Still, it would take something very big and unexpected for rates to make a big, sustained push back toward pre-election levels. Even then, it would take time to confirm such a shift.
- With fiscal and monetary policy paths both clearly putting pressure on rates, at least one of those would need to make a noticeable change before anything but a cautious, lock-biased approach makes sense as a baseline strategy. Floating should only be considered as a tactical opportunity to capitalize on temporary corrections.
- 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.