January 23, 2018
Mortgage rates finally managed to move lower in a small but meaningful way today--something they haven't done in more than 2 weeks! During that time, we've seen average mortgage rates improve on 2 occasions, but in both cases, the gains were small (some lenders even went slightly higher). That's the good news.
There are two caveats. The first has to do with the size of today's improvement. While it is indeed bigger than recent examples, many prospective borrowers will find it underwhelming. In isolated cases, it may get a loan quote down to the next .125% of a percent lower, but most quotes will simply have slightly lower upfront costs (while the rate itself remains unchanged). Looked at another way, we could say apart from yesterday, today's rates are the highest in more than 9 months.
The second caveat involves the current trend and where we go from here. After all, maybe today is great because it's the first sign of better things to come for rates. Enter the caveat. If today is such a sign, we won't know it without the benefit of hindsight. The current trend in rates is unequivocally negative and it will take more than a few medium-good days in the same week for that to change. Until that happens, it makes the best sense to remain defensive in terms of locking vs floating.
Loan Originator Perspectives
While bond markets posted decent gains today, all that accomplished was recouping most of Friday's losses. My pricing was marginally better than Friday's, which translates to "yucky" in technical parlance. I'm not for a second tempted to think rates are preparing to plunge, it'll take far more evidence than a 1 day "dead cat bounce" rally for that to happen. Lock early, lock often. -Ted Rood, Senior Originator
Bonds opened today with an nice rally. Unfortunately, the rate sheets i have seen do not appear to show these improvements which would lean me toward floating. However, the 10 year note has bounced off resistance at 2.61. With that line holding, i doubt we will see any major improvements on rate sheets. You may be safe floating overnight which would allow another day to test 2.61, but most of my clients are choosing to go ahead and lock in today. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.25%
- 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.