May 11, 2017
It's been slow and steady, to be sure, but mortgage rates finally inched their way up to the highest levels in more than a month today, depending on the lender. Some rate sheets were in line with April 9/10th levels while a few lenders were back in territory not seen since March 31st.
Interestingly enough, the higher rates arrive amid modest improvement in bond markets. Typically, bond market improvement results in lower mortgage rates, but in today's case, lenders were getting caught up with yesterday afternoon's weakness. In other words, bonds lost ground yesterday and not every lender had the time or will to respond to the market movement in the form of mid-day rate sheet changes. Instead, they waited until this morning to make the adjustment.
While the move higher does bring the dubious distinction of "highest rates in a month," it still wasn't much of a movement. Most lenders continue to quote conventional 30yr fixed rates of 4.125% on top tier scenarios, although a few lenders are already up to 4.25%.
Clearly, rates are trending higher, albeit gradually. To repeat the same assessment of lock/float risks seen all week: we'd like to see a departure from the aforementioned trend before anything other than a conservative, lock-biased approach makes sense.
Loan Originator Perspective
I, personally, would strongly consider floating at these levels, specifically with the recent signs of support. That said, you always have to evaluate risk vs reward. The reward? I can't believe you're going to see a large amount of improvement over the next week or two, just floating to the lower side of the range, with minimal rate improvement. The Risk? We break support and see rates go significantly higher. Brent Borcherding brentborcherding.com
Bonds tread water today, while stocks swooned. It's great that we didn't lose further ground, but merely breaking even rather than rallying indicates rates are still slowly trending upward. The last bond auction of the week posted better results than yesterday's, but that wasn't a high bar to clear. Float with extreme caution, or (better yet) not at all. -Ted Rood, Senior Originator
As long as we hold under 2.42 I would advise floating. The 2.42 threshold warrants serious consideration however. You wouldn't see much difference in pricing between current levels and 2.4s so there isn't much to lose if you want to consider that level your stop loss for floating. -Jason Anker - Sr. Loan Officer
Today's Best-Execution Rates
- 30YR FIXED - 4.125%-4.25%
- FHA/VA - 3.75 - 4.0%
- 15 YEAR FIXED - 3.375%-3.5%
- 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.