September 8, 2017
Mortgage rates were slightly lower today, despite moderate weakness in underlying bond markets. This would typically coincide with higher rates, but mortgage lenders haven't been moving in lock-step with markets amid this week's higher volatility.
The first dose of volatility came early, with weekend headlines concerning North Korea resulting in a nice move lower to start the week. Rates bounced on Wednesday on news of a bipartisan agreement to provide disaster relief and to temporarily raise the debt ceiling. The latter had been causing general economic concern--something that tends to benefit rates. Thursday brought the European Central Bank announcement which was beneficial for global bond markets because the ECB isn't in a rush to pull the plug on its accommodative efforts (translation: "stuff that helps rates stay low"). After all of that, today ended up being rather superfluous in the bigger picture. The fact that the nation is bracing for the ill effects of Hurricane Irma only decreased the focus on market-related events.
Bottom line: rates still hadn't caught up to yesterday's market improvements and were thus able to move just a bit lower today, despite bond market weakness.
Loan Originator Perspective
Bond markets continued their slow descent to lower rates today, and my pricing improved around 20 bps on most loans, There was scant economic data, but a prominent Fed member referenced US growth challenges. While rates haven't plummeted yet, the slow trickle lower continues. I'm OK with floating new loans for now, for borrowers who comprehend my magic ball isn't always right. Those within 30 days of closing who are risk averse should lock and eliminate all risk. -Ted Rood, Senior Originator
Bonds continue to hold onto most of the recent gains. However, secondary departments continue to be stingy with passing along the gains. As long as you can tolerate the risk, i would suggest floating over the weekend and evaluating your pricing on Monday. -Victor Burek, Churchill Mortgage
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.