June 8, 2017
Mortgage rates rose modestly today after spending 2 days at the best levels in nearly 8 months. Financial markets were tuned in to several key events with the power to cause volatility for rates today. Of these, the Senate testimony of former FBI Director Comey probably had the biggest spotlight. Rates were already coming under some pressure yesterday as Comey's prepared remarks were released, but bond markets (which dictate rates) didn't move quite enough for most lenders to adjust rate sheets.
Instead, lenders waited for this morning to pass along the bond market weakness in the form of slightly higher rates. As it turns out, traders had done a fairly good job of getting in position for the expected outcome of the Comey testimony, and there wasn't nearly as much intraday volatility as there might have been in the absence of yesterday's prepared remarks.
In other words, everything turned out to be less dramatic than it might have been. In the bigger picture, we're left with rates still very close to the lowest levels of 2017. But without the convincing break to new lows, there's a risk that momentum in rates will now shift higher. Floating is getting incrementally riskier. If you choose to float, make sure you have a plan in place with your loan originator as to the circumstances under which you'd like to lock.
Loan Originator Perspective
As referenced yesterday, bonds fell today as Comey's Senate testimony failed to ignite any impeachment fires. We're back "in the range", with current treasury yields at 2.20. Today's pricing is roughly .125 worse than yesterday's, and it's apparent we've seen the short term low in rates. Locking is advised, unless your closing is well over 30 days away. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 3.875-4.00%
- FHA/VA - 3.5-3.75%
- 15 YEAR FIXED - 3.125-3.25%
- 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.