January 26, 2018
Mortgage rates moved higher today, bringing them up to yet another 9-month high. Underlying bond markets ended the week in roughly the same shape as last week, but the mortgage bond market has been volatile over the past 3 days. That volatility makes it more expensive for lenders to guarantee any given rate, thus accounting for the new highs this week.
It's very important to note that there were two examples of reasonably positive movement in rates this week (Tue/Thu) and that both of them were quickly eclipsed and replaced with new long-term highs on the following day. It's for this reason that I've continued to advocate a defensive stance despite periodic victories. Such victories are bound to occur in any interest rate environment. We need to see bigger victories and more of them if it's going to make any sort of sense to be anything other than defensive when approaching the current interest rate landscape. Lock early and plan on rates moving higher until we see a broad shift in momentum. Rest assured, I'll be writing all about it whenever it finally happens.
Today's Most Prevalent Rates
- 30YR FIXED - 4.25-4.375%
- FHA/VA - 4.0-4.25%
- 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.