January 17, 2018
Mortgage rates were only moderately higher today, but the move was enough to officially bring them to the highest levels since the Spring of 2017. In other words, most lenders' rate quotes are fairly similar to recently bad days (like last Wednesday), but in terms of outright costs, you'd have to go back 9 months to see anything worse.
There was precious little by way of overt motivations for today's move. Whereas rates have a longstanding history of responding to economic data and other events that speak to the economy/inflation/etc., many of the recent movements have had more to do with arcane considerations among bond traders than the aforementioned history.
The timing of today's weakness is unfortunate as rates were just starting to look like they might be reinforcing recent ceilings. To be fair, in terms of Treasury yields, that's still true as 10yr Notes remain under the 2.60%. Mortgage rates have simply underperformed 10yr Treasuries since the latter hit 2.60% last week.
Any time a mortgage rate headline can claim "highest in 9 months," it's a good idea to remain defensive in terms of locking vs floating. The saving grace is that long-term highs typically precede extended periods of positivity for rates. It's just a matter of figuring out if these long term highs are high enough to rebalance the scales in the bond market.
Loan Originator Perspectives
Bond markets sold off by mid afternoon today, as stocks resumed their relentless upward spiral. Treasury yields are teetering at critical resistance levels; we'll hope they hold or this could get ugly/uglier. Yes, I'm still locking early. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.125%-4.25%
- 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.