August 29, 2017
It's one thing for the highly competitive environment of "rate table" advertising (where lenders compete and you get confused) to be reporting mortgage rates approaching the mid 3's. In fact, in that arena, rates have been in the 3% range for quite some time. Whether or not you'd qualify or even be interested in the specific scenario that is conducive to such rates is another story.
It's an entirely different thing for me to be telling you that rates are now easily into the high 3's, because I'm talking about the most prevalently-quoted conventional 30yr fixed rates for the average top-tier scenario across all lenders. 3.875% is now a given at almost any well-priced lender, provided you have a high credit score and a decent amount of equity. 3.75% certainly isn't out of the question for the best scenarios, and the aggressive lenders have no issues quoting 3.625% today for perfectly-aligned stars.
With all of the above having been said, please keep in mind that just a few "hits" to your scenario (slightly lower credit, lower downpayment, less aggressive lender) and you shouldn't be surprised to see a "4%" as the first number in your 30yr fixed rate quote instead of a "3%."
As for the motivation, today's gains were primarily a factor of news relating to North Korean missiles flying over Japan. It was a bigger-than-normal improvement in the recent context, but only a medium-big move in general. It was simply made more noticeable by the fact that rates were already at 2017's lows yesterday.
Should you lock now? Great question! No one will ever be able to predict that future for you, but here are a few thoughts. As recent improvements have persisted, a pull-back becomes increasingly possible. Additionally, there's never any harm in locking the lowest rates in nearly 11 months. On the other hand, lenders have been slow to adjust rate sheets to reflect bond market movement, so if you're exceptionally risk-tolerant, you could likely escape with minimal damage if markets happened to move against you.
Loan Originator Perspective
Unexpected news regarding missile launch by North Korea over Japan has helped bonds improve to their best levels since mid June. My clients are looking to take advantage of the improved rate sheets and locking in today. Unless the North Korea situation escalates, i do not see bonds being able to extend the gains much further. Lock in if within 30 days of closing today. -Victor Burek, Churchill Mortgage
Bond markets' posted small gains today amid more North Korean drama and Hurricane Harvey chaos. My pricing improved around 30 bps, and several clients opted to lock in the gains. Folks closing within 30 days should take a hard look at locking in the best pricing since early November. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 3.875
- FHA/VA - 3.5%
- 15 YEAR FIXED - 3.125%
- 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.