April 19, 2017
Mortgage rates were steady to slightly higher today, depending on the lender, despite bond market weakness. Typically, bond market weakness results in rates moving higher, but the timing of market movements can be important. Specifically, yesterday saw bond markets move to their best levels of the day in the afternoon--too late in the day for many lenders to react with lower rate offerings. Today's bond market weakness was intact right from the start of the trading session. As such, lenders simply kept rates close to unchanged as opposed to offering moderate improvements (something they likely would have done if bond markets held steady).
Most lenders continue to quote conventional 30yr fixed rates of 4.0% on top tier scenarios. The more aggressive lenders are now back into the high 3% territory (3.875% mainly, with a very small minority at 3.75%). Nearly every lender is quoting the same NOTE rates as yesterday, but today's upfront costs are slightly higher in some cases.
Since the middle of March, mortgage rates (and indeed, rates in general) have been trending steadily lower. When any financial instrument (rates, stocks, currencies, etc.) is in this type of trend, there will be some ups and downs. With the trend in rates being lower, most of the days have been "down" days, but there have been several pull-backs along the way. Today is another one of those pull-backs, and there's not much to read into it beyond that. Does that mean you should rest easy and assume that the previous trend will resume and you'll soon be seeing even lower rates? Not necessarily. The trend could be over at any time. The point is that this one day of bond market weakness doesn't defeat the trend in and of itself.
For the most risk-averse borrowers, this presents a good opportunity to lock--especially with rate sheets remaining in similar shape vs yesterday. More risk-tolerant borrower can wait to see if rates move back to Monday's levels (at which point they'd lock to avoid further increases).
Loan Originator Perspective
Bond markets surrendered a portion of their recent gains today, and mortgage pricing worsened slightly. "Losing" days are inevitable during market rallies, and it's bullish to see today's losses are still less than yesterday's gains. With pricing still near late November levels, borrowers are in good shape. There's only minor economic news the remainder of the week. The trend is still our friend. -Ted Rood, Senior Originator
Today's Best-Execution Rates
- 30YR FIXED - 4.0%
- FHA/VA - 3.5 - 3.75%
- 15 YEAR FIXED - 3.25%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- Investors were relatively convinced that the decades-long trend toward lower rates had been permanently reversed after Trump became president, but such a conclusion would require YEARS to truly confirm
- Instead of continuing higher in 2017, rates instead formed a narrow, sideways range, and held inside until April. Investor perceptions are shifting such that fiscal reforms and other policy developments will need to live up to expectations in order to push rates higher. Geopolitical risks would also need to avoid flaring up (more than they already have)
- For the first time since the election, we're in a rate environment where you wouldn't be crazy not to lock at every little opportunity/improvement. Until/unless it's broken, the highest rates of early-2017 mark the ceiling, and we're now waiting to see how much lower we can go from here.
- 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.