April 21, 2017
Mortgage rates were sideways to slightly higher this week as global financial markets braced for volatility surrounding this weekend's French election. While it may seem like a world away from the domestic mortgage market, events that potentially impact the stability of the European Union have a strong track record of filtering through to movement in domestic bond markets. And bond markets are the primary driver of day-to-day movement in mortgage rates.
In addition to preparations for the weekend's events, traders also reacted to today's headlines concerning tax reform. Just before 2pm, the Associated Press reported that Trump would announce his tax plan next week and that it would be bigger than "any tax cut ever." In general, the promise of tax cuts has fueled stock market gains at the expense of interest rates. True to form, stocks and bond yields (which correlate with mortgage rates) moved higher after the announcement.
For most lenders, the move was too little, too late to change the day's rate sheets, thus leaving us in similar territory to yesterday. In general, the entire week has been spent at or near 2017's lows. The late day weakness in bond markets means that we start next week at a bit of a disadvantage. In other words, in the unlikely event that bond markets begin the week at current levels, most lenders will be priced a little higher than they are today.
Loan Originator Perspective
Bonds ended the week virtually unchanged; Tuesday's gains evaporated as the week progressed. Unchanged is hardly a bad situation, as we're still near the lowest rates in 5 months. It's likely the French presidential election Sunday will result in a runoff, the bigger questions may be allegations of Russian election meddling and terrorist concerns. Bonds are somewhere between a holding pattern and a rally, if you're floating, keep your focus on the markets. -Ted Rood, Senior Originator
I continue to favor floating until within 15 days of closing. Bonds are in the green today, but with it being Friday, lenders are slow to pass along the gains. Especially slow today thanks to the weakness of the last couple days. There is never anything wrong with locking if you are happy with the current terms offered as it is always better to lock when you should have floated, then to float when you should have locked. -Victor Burek, Churchill Mortgage
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.