April 27, 2017
Mortgage rates moved lower today, following a policy announcement from the European Central Bank (ECB). Some investors were concerned the ECB might begin sprinkling in clues about rate hikes or an early end to bond buying programs, but there was no such drama in the announcement or the press conference that followed.
If you're not familiar with the ECB, it's essentially Europe's version of the Federal Reserve. Both wield tremendously large balance sheets (used to control supply and demand in rates markets, and thus, rates themselves). While central banks can only truly control the shortest term rates, investors who trade the bonds that drive longer-term rates (like mortgages) are nonetheless paying very close attention. Bottom line: with the ECB not sending any threating messages about shorter-term rates, longer-term rates were able to relax a bit.
The average lender continues offering conventional 30yr fixed rates in the 4.0-4.125% range for top tier scenarios. While these aren't the lowest rates seen all year, they're still reasonably close
Loan Originator Perspective
Bond markets bounced back slightly today, and several lenders improved rates in the PM. It appears we've weathered President Trump's tax reform plan, the question now is where markets' next motivation comes from. I'd be happy with flat rates for a few days, and guessing that's the likely case, Next week brings April's jobs report and other data, don't ignore markets if you're floating. -Ted Rood, Senior Originator
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.