Mortgage rates moved slightly lower today, although that's only true for lenders who issued mid-day improvements following the Fed's policy announcement.  Markets were, by no means, expecting the Fed to hike rates today, but there was a decent enough chance they would telegraph their intention to hike.  Such a move is certainly in the Fed's playbook, but if that's what they were shooting for today, it didn't show.  

Specifically, the Fed COULD have added verbiage like they did in October.  That's the meeting where they clearly telegraphed a rate hike at the next meeting by specifically saying "In determining whether it will be appropriate to raise the target range at its next meeting."  This time around, they didn't say anything of the sort.  Bond markets improved to the best levels in weeks--a fact that should result in even lower mortgage rates tomorrow if nothing changes too much overnight.  In other words, floating is less of a risk than normal this afternoon--especially if the lender in question did NOT offer improved pricing after the Fed announcement. 

Loan Originator Perspective

Not sure what the market wanted from the FOMC announcement.  The release was on the bullish side (normally pushes rates higher) yet bonds are rallying (suggesting lower rates).  With the nice rally we are enjoying, I would float overnight and see what tomorrow brings. -Victor Burek, Open Mortgage

We are struggling to break below the current range, albeit frustrating to be confined between 1.54-1.60, it's historically an exceptional spot to be in.  I still believe the range will break, eventually to new lower lows....time is the key.  For loans closing within 10 days, I am locked. -Gus Floropoulos, VP, The Federal Savings Bank

The Federal Reserve didn't raise their overnight rate today, to no one's surprise.  Their statement was obtuse (as usual) but bond markets reacted positively.  My pricing improved this PM, as did some other lenders.  In the big picture, however, we're still treading water in a tight range.  Nice to be trending to the lower end of it, certainly an opportunity for floating borrowers to lock the next couple of days as rate sheets catch up with MBS prices.-Ted Rood, Senior Originator

Today's Best-Execution Rates
  • 30YR FIXED - 3.5%
  • FHA/VA - 3.25%
  • 15 YEAR FIXED - 2.75%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • In the biggest of pictures, "global growth concerns" remain the driving force behind the long-term trend toward lower rates
  • Amid that trend, periodic corrections toward higher rates can and will happen.  These can happen for no apparent reason, or they can be brought on by changes in expectations surrounding central bank policy at home and abroad, as well as geopolitical and systemic risks

  • Time horizon and risk tolerance are 2 variables to consider when it comes to locking.  If you have plenty of time and don't mind losing some ground, set a limit as to how much higher rates could go before you'd lock to avoid further losses, and then float in the hopes of never seeing that limit.
  • In the shorter-term, it's always good to look for lock opportunities after rates have been moving lower or sideways repeatedly, especially if they've since begun to move back up in any sort of consistent way. 
  • As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.'  Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy.  It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).