February 6, 2018
Mortgage rates were mixed today, with most lenders offering slightly better terms this morning compared to yesterday's mid-day levels. Things took a turn for the worse in the afternoon as the stock market recovery pulled money back out of bonds. Lower demand for bonds results in rates moving higher, all else being equal.
With so much focus on stocks over the past two days, the following bears repeating: stocks and bonds are not reliable predictors of each other's movement. Yes, we definitely saw stocks have a clear influence on bonds and rates yesterday, but that isn't always going to be the case. It's worth noting that 10yr bond futures prices didn't move any more than 1.5% in response to more than a 7% drop in S&P futures.
In other words, rates were very reluctant to move lower yesterday. The implication is that they'll be perfectly willing to jump right back up to yesterday morning's levels, even if stocks aren't quite there yet. Any tactical opportunity to float has passed.
Loan Originator Perspective
Bond markets couldn't string together another green day today, as they failed to capitalize on yesterday's robust gains. My pricing today is the best it's been in at least a week, but given today's action, could worsen before the afternoon is finished. The trend is NOT our friend, time to lock! -Ted Rood, Senior Originator
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.