Mortgage rates were mixed today, depending on the lender, but generally held fairly close to yesterday’s levels.  All this in spite of bond market weakness (which normally pushes rates higher).  The discrepancy can be chalked up to a delay between market movements and lenders’ reactions that’s been increasingly prevalent during the summer months.  In other words, lenders still hadn’t fully responded to yesterday’s bond market strength and were thus able to absorb today’s weakness in many cases.

On a more interesting and perhaps more important note for confused mortgage rate shoppers, today is Thursday.  That means it’s time, again, for Freddie Mac’s weekly mortgage rate survey–an industry benchmark that’s quoted by multiple news outlets.  Unfortunately, most of the stories fail to drive home the point that Freddie’s survey does more to compare the week’s earliest rate offerings versus those of the previous week.  It’s pretty accurate if you’re looking for week-over-week comparison between Monday’s (and a bit of Tuesday’s) rates.  It runs the risk of being less relevant if there’s volatility during the week.

Indeed, we’ve seen rate volatility both this week and last, such that today’s rates are very close to last week’s highs, and noticeably higher than last Friday’s levels.  This runs counter to the 0.04% drop in rates reported by Freddie.  Daily rate offerings are UP by roughly the same 0.04% since Friday.

Loan Originator Perspectives

Bit of a lost day in bond markets, as both MBS and treasuries essentially idled in place Thursday.  Typically, we see some month end buying demand (pushing rates down), but not so much this month.  It appears there’s little motivation for significant improvement here, so I’ll stick with locking all but the most risk-seeking clients early in the loan process.  When there’s no clear trend, it’s not our friend! –Ted Rood, Senior Originator

Bonds have been unable to extend yesterday’s gains running into resistance around 2.30.  Following the strategy of lock the lows, float the highs, you should consider locking today.  If you can float overnight and lock on a shorter period tomorrow, i would take that chance. –Victor Burek, Churchill Mortgage    

Today’s Most Prevalent Rates

  • 30YR FIXED – 4.00%
  • FHA/VA – 3.75% 
  • 15 YEAR FIXED – 3.375%
  • 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.

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