January 8, 2018
Mortgage rates rose today, largely due to bond market movement from the end of last week that never made it onto last week's rate sheets. Specifically, the bond markets that underlie mortgage rate movement had a fairly bad day last Friday, but not until after most lenders already released their first rate sheets of the day.
Lenders normally need to see a certain amount of market movement by a certain time of day before issuing mid-day reprices, and Friday's weakness wasn't quite big enough. As I noted last week, that meant we would begin the current week at a slight disadvantage. It's that disadvantage that was seen on this morning's rate sheets. From there, bonds weakened a bit more, prompting a few more lenders to issue rate sheets with even higher rates.
All that having been said, the movements in question are small enough that they're mainly affecting closing costs in most cases (as opposed to actual interest rates). As such, most borrowers are still seeing top tier conventional 30yr fixed quotes in the 4.0-4.125% neighborhood. But the closing costs associated with those rates are just about as high as they've been since early 2017. For what it's worth, the same was true on several occasions in the 2nd half of December.
Loan Originator Perspectives
Bonds continued their recent weakness today, and my pricing worsened slightly from Friday's. I probably sound like a broken record at this point, but don't see much motivation for markets to improve, so will be locking loans early in the process. Floating *could* prove productive, but it sure feels like a losing bet to me.-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.