January 30, 2018
Mortgage rates continued just slightly higher today. While it wasn't the worst day they've had in terms of movement, it arrives as rates were already pushing the highest levels in more than 3 years. In that sense, it's like a few nerve-racking moments in the dark on some scary amusement park ride. You know it's probably not over and that there are probably scarier moments to come. Even if the scariest moments are behind you, that won't become apparent until you're officially off the ride. Within the scope of that analogy, mortgage rates are still very much strapped in.
Again, today itself wasn't too terrible. Rates are only fractionally higher, on average, and most lenders only made adjustments to upfront costs while continuing to quote the same "note rates" from yesterday. Unfortunately, the combination of today's upfront costs with yesterday's note rates is the worst deal for mortgage borrowers since the Spring of 2014.
The next 24 hours bring plenty of risk and opportunity to the short-term rate outlook. There's some risk that markets could react to talk of an infrastructure spending bill in tonight's State of the Union address (although the details were leaked more than a week ago). Tomorrow's economic calendar contains 2 risky events as well. In the morning, the Treasury will announce its updated borrowing plans for the 2nd fiscal quarter. To whatever extent this entails greater-than-expected issuance of longer-term Treasuries, it could put immediate pressure on mortgage rates (which tend to move in concert with longer-term Treasuries. The afternoon brings a scheduled policy announcement from the Fed. While they're not expected to hike rates, the verbiage used in then statement will be scoured for clues about the future rate hike outlook.
This isn't an environment for floating and hoping that rates will bounce back. We're on the scary ride until further notice. 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.
Loan Originator Perspective
Bonds and stocks swooned today, as inflation concerns continued to drive rates sharply upward. This isn't new, but is increasingly concerning and obvious. The 14+ year bond market rally is comatose, and may be put out of its misery within days. Lock early, or brace for (even) higher rates when you do lock. -Ted Rood, Senior Originator
Rates continue to march higher, luckily much slower today. We do have some important data later this week, namely the Employment Situation Report which could help or hurt bonds. But, until this trend can at least stabilize, locking is the way to go. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.375-4.5%
- FHA/VA - 4.0-4.25%
- 15 YEAR FIXED - 3.625-3.75%
- 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.