April 25, 2017
Mortgage rates moved moderately higher again higher today, as global financial markets continued reacting to recent geopolitical flashpoints (like the French election, discussed yesterday). Markets are also moving in anticipation of future flashpoints (like tomorrow's tax reform announcement). In general, investors have piled back into riskier assets like stocks because the French election reduces long-term risks to the European Union. Investors previously were more willing to buy bonds--a safe haven asset frequently used to insulate investors from increased risk.
The prospects for tax reform have a similar effect in that they encourage investors to favor riskier assets at the expense of bonds. When demand for bonds decreases relative to supply, rates move higher.
To be clear, we can't have any idea whether or not tomorrow's tax reform announcement will have teeth (in terms of moving markets). In other words, there's no telling what the actual reaction might be. It's simply easier for financial markets to take a "lead off" in case the tax announcement creates an opportunity to steal a base.
Nearly every lender is now back at rates not seen since before April 11th (though not quite as high as April 10th). For most, that means conventional 30yr fixed rate quotes of 4.0-4.125% on top tier scenarios.
Loan Originator Perspective
Bonds continued their orderly sell-off today, and pricing worsened for essentially the 6th consecutive day. It's time to face facts: France's election results lessened France's chances of EU withdrawal, averting systemic global economic drama, the reason rates dropped. Until more drama emerges (US budget impasse, 2nd round French election discord?), there's little incentive for lower rates. Float at your own peril. -Ted Rood, Senior Originator
Unlike last week, the trend is not our friend right now. I feel it is best to look at locking if within 30 days of funding. Til this trend breaks, I will continue to lock at 30 days. -Victor Burek, Churchill Mortgage
Today's Best-Execution Rates
- 30YR FIXED - 4.0-4.125%
- 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.