July 18, 2017
Mortgage rates fell today, but continue to lagging behind the movements seen in underlying bond markets. Part of that has to do with the timing of bond market swings over the past few days, but lenders also simply want to see markets pick a theme and stick with it. Simply put: trading levels in bonds ultimately dictate rates, and today's trading levels suggest the lowest rates of the month. Given that today's rates are still generally in line with last Friday's, it would be fair to conclude that we'll see more improvement on lender rate sheets, even if bond markets merely hold flat tomorrow.
Although we can't ever know what bond markets will do tomorrow, the fact that mortgage rates are heading into the day with a small advantage is useful knowledge. It means there's comparatively less risk involved in floating one's rate.
Balance that against the fact that lenders will likely continue to be cautious about making big adjustments until they see what markets are doing with Thursday's policy announcement from the European Central Bank. Today's bond market gains suggest that traders are already betting on a rate-friendly reaction, but there's no telling if that sentiment has already run its course.
Loan Originator Perspectives
Bonds have been able to break the floor that has held steady for quite some time around 2.30 on the 10 year note. We don't get confirmation of a break until it closes below for 2 consecutive days. Early Thursday, we get news from the ECB. Any confirmation of tapering sooner rather than later will send yields rising quickly. Most lenders rate sheets will not come out until after that. I wouldn't be surprised to see bonds pull back some tomorrow as investors await Thursday. So, today is the day to lock if you want to. I had many clients decide to pull the trigger this morning as our rate sheets did see some nice gains overnight. If closing within 15 days, i would recommend locking to remove all risk. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.125%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.375%
- 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.