August 3, 2017
Mortgage rates moved just slightly lower today, bringing them to the best levels in over a month for the 2nd time this week. While that sounds somewhat impressive, day-over-day movement has been very small and the overall range has been very narrow during that time. For most prospective borrowers, a scenario quoted last week would be at the same rate this week, but with lower upfront costs. Indeed, it's possible that a few quotes have moved .125% lower over that time, but upfront costs would likely be somewhat higher.
Here's how the info above would break down specifically. Borrowers being quoted the same rate vs last week are looking at an average upfront cost savings of roughly 0.3%, or $300 for every $100,000 borrowed. Clients being quoted the next rate lower (in 0.125% increments) are looking at average upfront cost increase of roughly the same amount. That $300 in upfront cost is worth roughly 7 bucks a month.
Tomorrow brings the important Employment Situation (the big jobs report, aka "nonfarm payrolls"), which always has the potential to cause volatility for rates. In the current environment, the markets that underlie rates have been relatively less focused on labor market data and more interested in inflation metrics (because that's what the Fed is most interested in).
Loan Originator Perspective
More minor gains in bond markets today, as our consolidation continued. There's still no trend here, treasury yields are seemingly cemented in place. Small pricing improvements are nice for floating borrowers, but can evaporate as quickly as they appear. Feels like expectations are low for tomorrow's jobs report; a strong report might hurt bonds more than expected. Float with eyes wide open, or lock. -Ted Rood, Senior Originator
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.