Mortgage rates finally caught a break today, moving somewhat lower after hitting the highest levels of the year yesterday afternoon.  In fact, several lenders moved rates even higher to start the day today, due to weakness in bond markets this morning.  As the day progressed, bond markets found their footing, and many lenders offered mid-day improvements on rate sheets (aka positive reprices).  

While the reprices brought today's average effective rate below yesterday's, we're still dealing with 4.0% as the most prevalently-quoted conventional 30yr fixed rate on top tier scenarios.  Most borrowers would only see improvements in the form of slightly lower upfront costs.  Relative to last Monday, most borrowers would be seeing rates that are 0.375 - 0.5% higher this week.  If you're just getting caught up with the massive mortgage rate drama of the past week, here are the relevant recaps:

(11/9/2016)    Worst Day For Mortgage Rates in Over 3 Years
(11/10/2016)  Mortgage Rate Pain on Par With Taper Tantrum
(11/14/2016)  Mortgage Rates Skyrocket to 4%. New Normal?

From a strategy standpoint, while it's nice to have made some gains today, we haven't seen enough strength to suggest this is anything other than a temporary correction.  We'd need to see rates recapture one of the three eighths of a percentage point they've recently lost before getting our hopes up. 

Loan Originator Perspective

The benchmark 10 year treasury note is still unable to set new lows from the recent trading.   I feel you have more to risk than to gain by floating right now.  So I continue to favor locking if closing within 30 days.   Always remember, rates are quick to rise, but very slow to move lower.  -Victor Burek, Churchill Mortgage

Bond markets were flat today, a welcome respite from our huge recent losses.  While rates didn't rise, they didn't fall either, and it's far too early to call an end to the rising rate trend.  I see little to be gained by floating, and the potential for more larger losses.  The trend is NOT our friend, I'm still locking early. -Ted Rood, Senior Originator

For people who were "caught with their pants down" due to the abrupt and aggressive spike in rates post election results, I am closely monitoring the 2.25-2.32 range on the 10 YR treasury as my personal stop loss.  Unless yields rise into that range, I would wait and see if we can build positive momentum.  On the other side, a break below 2.18 would warrant strong lock considerations.  For NEW applications, locking in at origination is important, as rates very well may trend higher.  Heading into a heavy holiday schedule (Thanksgiving, Hanukkah, and Christmas), a 45 day lock would be the recommended period.  For loans that were ill-prepared for the recent move higher, patience and discipline around the recent technical levels is the only bet, otherwise, lock in and close, move on with your life.   -Gus Floropoulos, VP, The Federal Savings Bank

Today's Best-Execution Rates

  • 30YR FIXED - 4.0%
  • FHA/VA - 3.75%
  • 15 YEAR FIXED - 3.25%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates have generally been trending higher since hitting all-time lows in early July, and exploded higher following the presidential election
  • Clearly-defined uptrends provide higher-than-average motivation to lock, especially when the pace of rising rates accelerates quickly

  • Risk-takers can try to time the dips in rates that may occur during that broader uptrend, but the reward for good timing generally isn't worth the risk in these situations
  • We'd need to see a sustained push back toward lower rates (something that lasts more than 1-3 days) before anything less than a cautious, lock-biased approach makes sense for all but the most risk-tolerant borrowers. 
  • 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).