January 11, 2018
Mortgage rates caught a break today, moving lower for the first time this week and pushing back from the highest levels since early July 2017. Like yesterday, strong demand at a Treasury auction helped US bond markets, but notably, only the longer-term maturities (10yr and 30yr bonds were the big winners). Fortunately, the bonds that underlie mortgage rates tend to correlate well with longer-term Treasuries.
Economic data also played a role with a weaker reading on inflation at the producer level. Tomorrow brings the much more important reading on consumer-level inflation (via the Consumer Price Index or CPI). If CPI is similarly weak, it could steel the resolve on the part of rates to hold to recent ceilings--potentially providing a base of operations for borrowers to consider a strategy other than locking early in the loan process.
Loan Originator Perspectives
Bond markets caught a bit of a break today, as a robust 30 year treasury auction helped quell recent losses. It's a start, but hardly evidence of a looming rally. I'll continue locking early, until "possible" rally looks more like "probable" rally. -Ted Rood, Senior Originator
Bonds are having a nice day today. Tomorrow we do get consumer inflation. If inflation is less than thought, i think this rally can extend further. Todays producer prices were weaker, so i am hopeful we get the same report tomorrow on consumer prices. I like floating overnight here. If you do want to lock, wait until as late as possible to allow your lender time to reprice for the better. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.125%
- FHA/VA - 3.75%
- 15 YEAR FIXED - 3.375%-3.5%
- 5 YEAR ARMS - 2.75 - 3.25% depending on the lender
Ongoing Lock/Float Considerations
- 2017 had proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016.
- While rates remain low in absolute terms, they moved higher in a more threatening way heading into the 4th quarter, relative to the stability and improvement seen earlier in 2017
- The default stance for now is that this trend toward higher rates has the potential to continue. It will take more than a few great days here and there for that outlook to change.
- For weeks, this bullet point had warned about recent stability inviting a bigger dose of volatility. That volatility is now here. As such, locking is generally the better choice until the volatility is clearly dying down.
- 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.