May 5, 2017
Mortgage rates recovered today, moving sideways to slightly lower after losing ground over the past few days. Today's focal point was the Employment Situation--the big "jobs report" for the month of April. Job creation ended up slightly stronger than expected (211k new jobs created versus a median forecast of 185k).
Stronger jobs data typically puts upward pressure on mortgage rates, but in today's case, there were some mitigating factors. The biggest mitigating factor is that rates have simply been moving in a very narrow range, and all the ups/downs we've been discussing in recent weeks aren't tremendously consequential for the average borrower. Beyond that, 211k vs 185k isn't a very big "beat" (+26k). Moreover, the last report was revised from 98k to 79k--a 19k drop, almost fully offsetting the 26k beat.
Underlying bond markets (which dictate mortgage rates) experienced some volatility as traders figured out whether this was good news or bad news. Ultimately, today's trading levels ended up very close to yesterday's. Most lenders were able to offer rates that were similar or just slightly lower. In the bigger picture, however, it's still a fairer assessment to view the recent trend as pointed toward slightly higher rates.
Loan Originator Perspective
April's NFP Jobs Report was essentially a non-impact event today, despite jobs' growth exceeding expectations. Bonds are still stalled, seemingly content to drift in place until clear evidence of economic growth/stagnation appear. Floating COULD yield significantly improved pricing, but more likely minor ones. I'm still advising borrowers within 30 days of closing to lock, unless they have a real zeal for risk. -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.