Mortgage rates moved lower this morning, more by way of catching up with yesterday’s market movement than anything.  Specifically, bond markets (which underlie interest rates) were very little changed this morning.   Because mortgage lenders hadn’t fully adjusted yesterday’s rate sheets to reflect yesterday’s strong move in bond markets, rates had a bit farther to fall.  As such, most lenders began the day with the best rate sheet offerings of the year.

Quite a few lenders ended the day at the best levels of the year as well, but more than a few made negative adjustments in the afternoon due to market volatility.  At issue was an announcement that lawmakers were coming together to pass a disaster relief bill that included a temporary increase of the debt ceiling, thus allowing government operations to continue through December.  Given that political dysfunction is one of the factors helping rates stay low in 2017, it’s not too surprising to see rates bounce slightly higher with a fresh example of lawmakers actually being able to come up with bipartisan solutions to previously divisive issues.

Lenders who did NOT adjust rate sheets higher this afternoon are starting tomorrow at a disadvantage.  In other words, if bonds don’t change much overnight, those lenders are likely to begin the day with slightly higher rates.

Loan Originator Perspective

News of a probable debt ceiling extension spooked bond markets today, and morning gains vanished by early PM.  Too early to say if this is a momentary pause in the march to lower rates or the market’s bottom, but I locked my floating loans.  With pricing as good as it’s been since November, locking here seems like the safe play for those closing within 30 days.  –Ted Rood, Senior Originator

My rate sheets did show some improvement today, but i feel there is still plenty of cushion. Despite that, i think locking in these recent gains is the way to go.   Bonds have bounced on news of a debt ceiling increase deal in Congress and the rhetoric involving N. Korea seems to be subsiding.  Of course, this can change quickly so only those that can afford to be wrong should consider floating for now. –Victor Burek, Churchill Mortgage

Today’s Most Prevalent Rates

  • 30YR FIXED – 3.875
  • FHA/VA – 3.5% 
  • 15 YEAR FIXED – 3.125%
  • 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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