January 3, 2018
Mortgage rates were unchanged to slightly lower today, depending on the lender. Merely holding steady is a victory today. Reason being: bond markets (which dictate rates) weakened yesterday. That implied higher rates ahead. Lenders had the choice to change yesterday's rate sheets for the worse or to wait until this morning to make the adjustments. Very few issued reprices yesterday. In other words, this morning's rate sheets needed the overnight bond market strength in order to hold steady.
Fortunately, that strength was just enough for the average lender to remain in similar shape to yesterday or better. There were a few brief spats of intraday market volatility, but none were sufficient to prompt any rate changes from mortgage lenders.
The Fed released the Minutes from its last policy meeting. These suggested the Fed had a deeper conversation regarding the impact of tax reform than conveyed in the official policy statement. In general, to whatever extent the Fed feels like it needs to combat a hotter-running economy, it would be more willing to hike rates. Markets reacted with weakness in shorter-term bonds (because the Fed Funds Rate has the most impact on the shortest-term debt). The weakness (aka, higher yields on stuff like 2yr Treasury Notes), didn't translate to the longer-term bonds that dictate mortgage rates.
Loan Originator Perspectives
Bonds staged a modest rally today, and my pricing improved marginally over yesterday's. Inflation data released this AM exceeded expectations, and made the gains more meaningful, Minutes from the Fed's December meeting released this PM didn't impact markets. I'm still on "lock early" mode, and will continue to be until motivation for a market rally arises. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.0%-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.