Mortgage rates rose moderately today, as bond markets generally bounced back from the best levels in 8 months yesterday. Despite the bounce, rates are still in line with their best levels of the year. Only a handful of days have been any better and most of them have been in the past 2 weeks.
We expected to see more volatility this week, for better or worse, and so far we’ve seen both. But while day-to-day movement has been bigger, it hasn’t been quite big enough for many lenders to change actual “note rate” quotes–just the upfront costs associated with any given rate. In other words, many borrowers are only seeing changes in the form of slightly higher closing costs (which raised the “effective rate”) as opposed to the official interest rate tied to the mortgage note.
More risk-averse clients should consider locking due to the bond market weakness seen since yesterday’s Fed announcement. Risk-tolerant clients can take heart in the fact that bond markets are holding onto slightly better levels than they did last Wednesday (the last time rates bounced after hitting 2017 lows). This keeps the trend generally positive over the past month. If rates continue much higher tomorrow, that trend would increasingly be in question.
Loan Originator Perspective
Bond markets surrendered a portion of yesterday’s gains, and rates will have to overcome significant resistance to drop much further. My rate sheets are close to yesterday’s, and it appears “the range is the range” for the moment. Nothing wrong with being range bound near the lowest rates of the year though. I’m locking most July loans at origination, floating most closing beyond July. –Ted Rood, Senior Originator
Today’s Most Prevalent Rates
- 30YR FIXED – 3.875-4.00
- FHA/VA – 3.5-3.75%
- 15 YEAR FIXED – 3.125-3.25%
- 5 YEAR ARMS – 2.75 – 3.25% depending on the lender
Ongoing Lock/Float Considerations
- Investors were relatively convinced that the decades-long trend toward lower rates had been permanently reversed after Trump became president, but such a conclusion would require YEARS to truly confirm
- Instead of continuing higher in 2017, rates instead formed a narrow, sideways range, and held inside until April. Investor perceptions are shifting such that fiscal reforms and other policy developments will need to live up to expectations in order to push rates higher. Geopolitical risks would also need to avoid flaring up (more than they already have)
- For the first time since the election, we’re in a rate environment where you wouldn’t be crazy not to lock at every little opportunity/improvement. Until/unless it’s broken, the highest rates of early-2017 mark the ceiling, and we’re now waiting to see how much lower we can go from here.
- 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.