January 22, 2018
Mortgage rates pushed up to yet another 9-month high today--something that's become all too common in the past few weeks. Just as troubling is the fact that 10yr Treasury yields--the bigger, more important neighbor that shares the street with mortgage rates--are operating at their highest levels since early 2014. Mortgage rates aren't directly tied to Treasury yields, but big momentum in Treasuries tends to spill over.
Incidentally, both Treasuries and MBS (the mortgage-backed-securities that underlie mortgage rates) were roughly unchanged today. The problem is they were much weaker on Friday afternoon and mortgage lenders didn't fully adjust for that fact with Friday's rate sheets. That left them with a bit of catching up to do this morning. In other words, lenders needed to push their rates just a bit higher to get caught up with Friday's market movements.
It's still smart and safe to remain defensive in terms of locking vs floating. Plan on the pain continuing until we have a clear indication that rates have initiated a counterattack.
Loan Originator Perspectives
Early bond gains vanished quickly today, as DC reopened for another week or two. In addition, details of the proposed infrastructure plan began to emerge, along with the presumption of looming inflation. Treasury yields are near April 2014 levels, and don't look to be leveling off soon. Locking early is the only rational way to go, those floating "hoping" rate return to levels from several week ago are deluding themselves. This is getting ugly. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.25-4.375%
- FHA/VA - 4.0%
- 15 YEAR FIXED - 3.625%
- 5 YEAR ARMS - 3.0-3.5% 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.