January 9, 2018
Mortgage rates rose again today, adding to a nasty 2-day streak that's taken the average 30 yr fixed rate an eighth of a point higher. That's an uncommonly big 2-day move, and it brings rates to their highest levels since early July 2017.
Of potentially more concern is the fact that the current rate spike is making an ominous suggestion about the broader trend. Specifically, the last 3 months of 2017 saw rates consolidate in a mostly-sideways pattern. We'd been waiting for a bigger break higher or lower. Although there were some early warning signs that the breakout would be to the upside, this week has all but confirmed it. The implication is for things to get worse before they get better.
Loan Originator Perspectives
Bond markets' recent sell-off accelerated today, as oil prices and stocks both continued to rise. Economic growth typically creates inflation, which is bond owners' nemesis. I've been saying "lock early", and today's action validates that strategy. No reason to be floating here, if closing within 30-45 days. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 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.