September 14, 2017
Mortgage rates moved higher today, despite resilience in underlying bond markets. If you were to ask bonds, they'd vote for rates remaining flat--well, sort of. There is a timing issue that I brought to your attention yesterday where mortgage lenders had yet to adjust for yesterday afternoon's bond market weakness (weaker bonds = higher rates) and were thus more likely to start today with higher rates, all other things being equal.
That's exactly what happened. And while it does mean that rates are higher than they were yesterday, we're actually seeing some supportive cues in bond market for the first time all week. Specifically, bonds have held fairly steady today--something they've had a hard time with recently. It's early to say for sure, but this could be the first sign that this week's corrective uptrend in rates is running out of steam.
All told, that correction resulted in most lenders moving up an eighth of a percentage point (.125%) in rate. The average top tier conventional 30yr fixed quote is hovering somewhere between 3.875% and 4.0%.
Loan Originator Perspective
Bond markets were open today, but it was tough to tell as prices were virtually flat. This morning's "warm" inflation data failed to motivate sellers to the extent it typically would have. My pricing is down slightly from yesterday's. Glad the losses have slowed, but not sure we're poised for gains either. Floating is a 50/50 call here, depends on how well you like to roll dice. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 3.875-4.0%
- FHA/VA - 3.5%
- 15 YEAR FIXED - 3.25%
- 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.