Mortgage rates were flat today, after weaker-than-expected construction data prompted a positive bounce for bond markets. In general, bonds (which dictate mortgage rates) improve when economic data is weaker. Before this morning’s data, rates were at risk of coming out slightly higher compared to yesterday’s latest offerings.
By holding flat, rates remain very close to the best levels seen in more than 8 months. This also keeps rates in a gentle downtrend over the past 3 months. Risk-tolerant clients are typically best-served by floating their rates while these trends remain intact. If rates break above the trend, it would serve as a cue to lock. Risk-averse clients are more interested in the fact that rates are near those 8-month lows, and should generally be locking.
Loan Originator Perspective
I am still finding most clients are favoring locking in at current pricing. I have never been a fan of locking on Friday and that continues today. With a lack of data next week, i think it would be worth the risk to float over the weekend and evaluate pricing Monday morning. Bonds did open up weaker this morning so my pricing is slightly worse than yesterday. As the day has progressed, bonds have rallied back into the green and a few lenders have repriced better. If locking today, wait until as late as possible to see if your lender passes on the gains. –Victor Burek, Churchill Mortgage
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.