May 12, 2017
Most of the movement in mortgage rates had been slow, steady, and generally unfriendly in recent weeks. Today was a stark exception as rates surged significantly lower (relative to their recent range) following weaker-than-expected economic data. Weak economic data tends to help rates move lower, and this morning's reports were the most important of the week (Retail Sales and Consumer Prices).
The reaction to the data was swift because investors were waiting to see if it would confirm fears about the direction of rates earlier in the week. Not only did the data fail to confirm the fears, it suggested a completely contrary move. In other words, rates were forced to make a quick course correction. They ended up moving right back in line with last Friday's levels for most lenders. The entire week of anxiety was erased in a few short hours, with the average lender nearly an eighth of a percentage point lower on a conventional 30yr fixed quote.
Loan Originator Perspective
If you floated overnight, you should be rewarded today. Bonds are rallying nicely, but since it is a Friday, I think lenders will be reluctant to pass along all the gains. If you want to lock today, best strategy is to wait until as late as possibly as several lenders have already improved pricing from this morning’s initial rate sheets. I would favor floating over the weekend and evaluate pricing Monday morning. Victor Burek, Churchill Mortgage
The bounce at 2.42 came together as expected. We're not seeing a huge improvement to rate sheets yet mostly because it's Friday. I'd recommend floating anything until Monday and we will reassess then. -Jason Anker - Sr. Loan Officer
Today's Best-Execution Rates
- 30YR FIXED - 4.125%
- 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.