September 25, 2017
Mortgage rates held their ground yet again, and are finally starting to look resilient after a relatively sharp move higher over the past 2 weeks. This was true even before mid-day headlines put additional downward pressure on rates.
The headlines in question quoted North Korean officials saying that the US had "declared war" and that North Korea had the right to shoot down US warplanes even outside North Korean airspace. When news headlines include the words "US, declares, and war" financial markets tend to respond, even if much of that response is driven by headline-reading trading algorithms. To quote myself from Friday: "in general, these sorts of headlines lead investors to shed risk--something that frequently takes the form of selling stocks and buying bonds. When investors buy bonds, rates move lower."
Some lenders responded to the bond market improvements by adjusting today's rate sheets. Other lenders maintained the same rates from the morning and thus will be more likely to offer better pricing tomorrow, assuming minimal bond market movement overnight.
Loan Originator Perspective
Today's rabid rant from North Korea's foreign minister ("US declared war on North Korea") helped push rates lower as of early PM trading. There's no guarantee these gains hold (or compound) without additional drama, we'll see what the rest of today brings. Floating borrowers should definitely discuss today's pricing with their loan officers, may be time to pull the trigger. -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.