July 26, 2017
Mortgage rates were steady to slightly lower today, despite fairly substantial movement in underlying bond markets. Bond prices ultimately do more to inform mortgage rates than anything else. Prices moved higher today by an amount that would typically result in effective rates falling 0.03-0.05% depending on the lender. But as it stands, the average lender is only 0.01% lower than yesterday's latest offerings.
Given recent volatility, it's not outside the realm of possibility that lenders are simply waiting to make sure the gains are still around tomorrow before they adjust rate sheets more aggressively. This would fit with recent patterns of lender rate sheet movement lagging bond market movement.
As for today's market motivation, the lion's share of the movement happened after the Fed Announcement. This is interesting because the announcement was very much in line with market expectations. As such, traders could have simply been in a defensive stance and waiting to make sure the Fed didn't make any changes that would be unfriendly for bond markets.
Loan Originator Perspectives
Bond markets rallied moderately following a fairly neutral Fed Statement today. As expected, Fed did not raise their benchmark overnight rate, and mentioned inflation was below their stated 2% goal. While this afternoon's gains are nice, we're still below Monday's levels, and there's no clear rate trend in place. Tomorrow's AM pricing may improve over today's, simply because not all lenders will reprice this PM. Borrowers wanting to lock should do so as late as possible today or wait until tomorrow's pricing is released. -Ted Rood, Senior Originator
Bonds have rallied following the FOMC rate announcement today. As of 3pm, only a couple lenders have issued reprices for the better even though the rally justifies many more. With bonds well into the green and with lenders being slow to pass along the gains, i feel it is worth the risk to float overnight. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.00%
- 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.