August 16, 2017
Mortgage rates dropped today after news broke (first rumors, then confirmation via Twitter) that President Trump was disbanding his councils of CEOs. The move apparently came in response to attrition among several CEOs following Trump's press conference on recent events in Charlottesville, VA. In not so many words, Trump disbanded the councils before any more CEOs had a chance to quit.
Political turmoil--especially that which appears "anti-business" in any way--always runs the risk of hurting stocks and helping bonds. That's exactly what happened today. "Helping bonds" in this context means higher demand for bonds among investors. Excess demand for bonds pushes rates lower.
The market reaction to the Trump news overshadowed what was set to be the day's big-ticket event up to that point--the release of the Minutes from the most recent Fed meeting. The Minutes ended up being fairly tame--especially for those who'd tuned in to most of the recent Fed speeches (which, over the past 3 weeks, have largely reiterated views stated in today's Minutes). In other words, the Fed Minutes were old news, and they did nothing to stop the positive moves in bonds.
Rates ended the day back at 2017's lows, but only after a throng of mid-day price improvements from mortgage lenders. The average lender is right in line with last week's best levels.
Loan Originator Perspective
Bonds rallied somewhat today, as Fed minutes mirrored recent Fed board members' comments. By mid PM, a few lenders improved their pricing, with more likely to follow. We're still within our prior range, with treasury yields at 2.22%, so don't look for radical gains. Folks within 30 days of closing should look at pricing later today or tomorrow AM to see if locking makes sense for their situations. -Ted Rood, Senior Originator
Bonds managed to bounce off support at 2.28 continuing to confirm our range-bound trading between 2.28 and 2.21. Following the FOMC annoucement, bonds have continued to move lower and have bounced at 2.21. Unable to break again. All that said, if your lender reprices for the better today, I would lock up. If your lender doesnt reprice better, I would still consider locking but am open to the idea of floating 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.