August 8, 2017
Mortgage rates moved microscopically lower today, keeping them in line with the best levels in more than a month. The caveat is that there really hasn't been much change during that time, so we're measuring very small differences in average upfront costs among multiple lenders. This may or may not translate directly to any given scenario, depending on the lender.
Bond markets (which underlie mortgage rates) are having a hard time making improvements past several key levels. It's easiest to observe this inertia around 10yr Treasury yields of 2.22 and 2.25%. On the stronger few days seen at the end of last week, yields challenged 2.22%. So far this week, however, they've been unable to break below 2.25%.
Rather than translate to an outright mortgage rate, this "resistance to improvement" in bonds simply means that upfront costs aren't getting any lower for the same rates quoted last week, but today's are technically lower than yesterday's!
Bond market participants are most interested in Friday's Consumer Price Index--a leading inflation report that the Fed will use in deciding when it's time to hike rates again, and to implement its balance sheet reduction plan. The faster the Fed does those things, the more upward pressure on rates, in general.
Loan Originator Perspective
i and my clients feel locking if within 30 days is the way to go. We have very strong resistance just below current levels that we have been unable to break. Until we do so, locking is the prudent call. With new treasury supply this week, i see nothing on the immediate horizon that can cause bonds to rally through this floor. -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.