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Mortgage Rates Slightly Higher, But Steady Overall

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Mortgage rates rose slightly again today, despite moderate improvement in underlying bond markets.  Typically, bond market improvement corresponds to lower rates.  Today was an exception because of the timing of recent volatility.  Friday afternoon saw a sharp deterioration in bond markets (implies rates moving higher), but for many lenders, it was too late in the day to reissue rate sheets.  Those lenders had to wait until this morning to adjust rates higher to account for the bond market movement.  In simpler terms, today’s higher rates are merely a delayed reaction to Friday’s bond market weakness.

All that having been said, mortgage rate movement continues to take place inside an exceptionally narrow range.  For the past 3 weeks, most borrowers would be quoted the exact same NOTE rate from most lenders, with the only variation coming in the form of upfront cost.  The most prevalent top tier conventional 30yr fixed quote remains 4.125%, though several lenders are on either side of that by 0.125%.

Loan Originator Perspective

Bonds seem quite content to idle in place at the moment, with today’s rates mirroring Friday’s.  Markets gave bonds ample reason to rally Friday (Syrian missile attacks, luke-cold March jobs report), and bond markets just yawned.  Looks like that’s the short term trend.  I don’t know how much up or down side there is to floating now.  Toss a coin, I guess. –Ted Rood, Senior Originator

Today’s Best-Execution Rates

  • 30YR FIXED – 4.125%
  • FHA/VA – 3.75-4.00%
  • 15 YEAR FIXED – 3.375-3.5%
  • 5 YEAR ARMS –  2.75 – 3.25% depending on the lender


Ongoing Lock/Float Considerations

  • Some investors are increasingly worried/convinced that the decades-long trend toward lower rates has been permanently reversed, but such a conclusion would require YEARS to truly confirm
  • Still, it would take something very big and unexpected for rates to make a big, sustained push back toward pre-election levels.   Even then, it would take time to confirm such a shift.
     
  • With fiscal and monetary policy paths both clearly putting pressure on rates, at least one of those would need to make a noticeable change before anything but a cautious, lock-biased approach makes sense as a baseline strategy.  Floating should only be considered as a tactical opportunity to capitalize on temporary corrections. 
     
  • 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.

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