February 21, 2018
Mortgage rates continued higher today following the release of the Minutes from the Federal Reserve's (aka "The Fed") most recent policy meeting. The Fed was slightly more upbeat than markets expected, saying that most members agreed that a stronger economy increased the likelihood of further rate hikes. Although the Fed Funds Rate doesn't directly dictate mortgage rates, there is plenty of long-term correlation. Because the Fed only meets 8 times a year to adjust rates (and rarely adjusts rates on all 8 occasions), bond markets (which include mortgage rates) are constantly adjusting to what the Fed will probably do in the future.
Of course, it could be argued that both the Fed AND financial markets are simply adjusting to the state of the economy, inflation, etc., but that's more of a philosophical discussion (chicken vs egg type stuff). What's important is that financial markets saw a reason for the recent trend in rates to continue. Unfortunately, today that meant rates moved to their highest levels in more than 4 years. For what it's worth, today's rates are only microscopically higher than last week's highs.
Loan Originator Perspective
Rates are still trending up, I'm still recommending locking early, and there's still no apparent reason to believe rates will return to better levels anytime soon. But it is Wednesday, so we're on Hump Day, if that makes anyone feel better! -Ted Rood, Senior Originator
Nothing has changed recently regarding lock/float. Lock as early as you can. The trend still favors higher rates and that trend does not look to change at the present. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.625%
- FHA/VA - 4.375%
- 15 YEAR FIXED - 3.875%
- 5 YEAR ARMS - 3.5-3.75% 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.