May 31, 2017
Mortgage rates improved modestly today as lenders caught up with yesterday afternoon's market movements. Most lenders will issue mid-day changes in rate sheets ("reprices") when bond markets make a big enough move in one direction or the other during the day. Sometimes, this movement doesn't happen until the afternoon hours (which was the case yesterday). A handful of lenders responded with rate sheet improvements, but most simply waited for this morning.
The net improvement isn't huge, by any means. In fact, most prospective borrowers may see the exact same quote as yesterday. But on average, the combination of rates and upfront costs is at its best level since May 18th. Specifically, 3.875-4.125% is the prevailing range, with most lenders quoting 4.0% on top tier 30yr fixed scenarios.
The next 2 days bring the week's most important economic data and thus, more potential for market movement. Rates have generally been low and flat for 2 weeks now. That's the sort of pattern that typically precedes a bigger move, for better or worse.
Loan Originator Perspective
Not an easy call today in my opinion. We're at or very near the best levels in over 6 months. Month end trade flows may have helped push us to these levels but tomorrow is the 1st so don't count on any more help from that phenomenon. We have the arguably important ADP report due out pre-market tomorrow and then ISM at 10am (before most rate sheets). That's tons of potential market moving stuff going off before we see a rate sheet with a June 1st date on it. I can't blame anyone from locking these levels. -Jason Anker - Sr. Loan Officer
Bonds look to close out May at the best levels in about a month. It is rather common for bonds to rally going into month end due to investors re-balancing their portfolios which can lead to a pull back when the next month begins. Majority of my clients are choosing to lock in today and take advantage of the recent gains on rate sheets. I think this is a wise choice as tomorrow we can have a pull back for no apparent reason other than its a new month. -Victor Burek, Churchill Mortgage
Bonds have had a nice run the past 3 weeks, and MBS have improved 100 bps. Current pricing is as good as we've seen the past 7 months, and there appear to be limited inflation concerns. With that being said, month end buying is likely responsible for a portion of this week's gains, and that changes tomorrow. Friday's Jobs Situation report for May employment adds another dose of drama. If you float past today, be aware that pricing may suffer later this week. The trend, such as it is, remains our friend for the moment, but it's more of a trickle than a flood towards lower rates. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.00%
- FHA/VA - 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.