June 5, 2017
Mortgage rates were modestly higher today after hitting the lowest levels since early November at the end of last week. Along with mid-April, this is the second time rates have been in this territory in more than 7 months. Most prospective borrowers will see very little--if any difference between Friday's rate quotes and today's. Certainly, the NOTE rate itself will be unchanged, with any deterioration limited to the upfront costs that impact the EFFECTIVE rate (similar to APR).
With rates being driven by financial markets and with investors generally on edge ahead of Thursday's congressional testimony from former FBI Director Comey, it makes sense to Friday's momentum to ebb to some extent. Thursday should remain a focal point for volatility this week. Remember, volatility (and thus, the risk of floating vs locking) goes both ways. If Thursday ends up being a watershed moment in US political history--as some suggest--rates could easily continue to new lows for 2017. If, on the other hand, the testimony is anticlimactic or casts Trump in a favorable light, rates could rise very quickly.
Loan Originator Perspective
Bonds idled in place today, as treasury yields failed to break stalwart resistance at 2.14%. While it's not surprising we're stalled at these levels, it does mean rates may be primed for a bounce back up. If you're floating, and closing within 30 days, it's time for a gut check. With a Fed meeting looming next week, it would take ample motivation for bonds to rally further here. Frankly, I don't see it happening. Float with caution, or better yet, lock up the gains while the getting is good. -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.