April 3, 2017
Mortgage rates fell fairly quickly today as investors adjusted bond market holdings for the new month (higher demand for bonds coincides with lower rates). Money managers have to hold a certain mix of bonds by the end of any given month and are then free to adjust holdings as the next month begins. This adjustment can often create some of its own momentum on the first day of any given month, but today saw more than normal.
Most lenders are back to quoting conventional 30yr fixed rates of 4.125% on top tier scenarios. Last week, 4.25% was slightly more prevalent. That makes today's rates the lowest since February 24th, on average--just before the Fed began talking up its rate hike likelihood for the March meeting (resulting in a quick move higher for rates of all shapes and sizes).
There are several important economic reports and events this week, with the Minutes from the most recent Fed meeting on Wednesday and the Employment Situation ("jobs report") on Friday. If rates continue to fall, they will soon be at the lower boundary of 2017's range. Any sharp move higher should be viewed as a sign that the range isn't yet ready to break.
Loan Originator Perspective
Bonds posted broad gains today, as both treasury yields and MBS prices reached levels last seen in late February. Most lenders improved their pricing mid-day, some more than once. While the future is hardly a given, this rally feels like it's got legs at the moment. While those closing within 15 days likely want to grab these gains, floaters with some risk tolerance and time may see further improvements. If floating, have a "stop/loss" in place with your originator to ensure you're protected if market momentum reverses. -Ted Rood, Senior Originator
Today's Best-Execution Rates
- 30YR FIXED - 4.125%
- FHA/VA - 3.75-4.00%
- 15 YEAR FIXED - 3.375-3.5%
- 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.