May 2, 2017
Mortgage rates fell modestly today, but remained well inside the narrow range that's been intact for more than a week. For most lenders, that means conventional 30yr fixed quotes of 4.0-4.125% on top tier scenarios. Most borrowers will continue to see day-to-day changes in the form of minor adjustment to upfront costs.
Narrow ranges in financial markets speak to indecision or an unwillingness to take too much of a stand ahead of potentially important developments. In the case of the current narrow range (which affects stocks as well as bonds), markets may be waiting for one of several big-ticket events in the coming days. The most immediate possibility is tomorrow's Fed announcement. While the Fed isn't expected to raise rates at this meeting, traders will nonetheless be scouring the verbiage for clues about the Fed's next move (possibly at the June meeting).
In terms of locking and floating, a narrow range ahead of big-ticket events means higher risks and greater rewards for floaters. In other words, if you roll the dice and win, the payoff will be meaningful. But if you lose, the first move higher runs the risk of being bigger than a typical move higher.
Loan Originator Perspective
I continue to favor locking all loans once within 30 days of funding. The benchmark 10 year note has been unable to break resistance over the last few days. We also have some potentially high impacting events coming up starting with the FOMC announcement tomorrow and wrapping up with payroll report on Friday. -Victor Burek, Churchill Mortgage
Bonds rebounded today, posting moderate gains, but failed to break previous resistance levels. We're still sitting within our recent ranges, but near rates' recent lows, and numerous lenders repriced better by early PM. Given tomorrow's Fed announcement and Friday's April NFP jobs report, it would have been stunning to see any significant moves today. It's tempting to lock here, certainly wouldn't dissuade those within 30 days of closing who want to wrap up the gains. -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.