Mortgage rates were lower today for a few lenders, but higher for most others, dragging the average 0.01% higher in terms of effective rates. Note rates (which don’t factor in the upfront costs associated with a loan quote), on the other hand, haven’t changed much in recent days, with 4.0% being the most prevalent for top tier 30yr fixed scenarios.
Momentum has generally been negative for rates since the weekend of Hurricane Irma. Markets had priced in quite a bit of risk at the time (typically involves stock prices and rates moving lower), not only due to the Hurricane, but also North Korea-related uncertainty. When Irma proved to be slightly less catastrophic than forecast, and when the weekend passed without a major nuclear test from North Korea, financial markets embarked on a correction that pulled rates and stock prices higher.
Just when that correction looked to be leveling off, rates lurched higher again last week due to a combination of factors including the release of the Trump tax plan. With that, rates are back in line with levels not seen since July. Any meaningful weakness from here would leave rates in the worst shape since March. With all of the above in mind, a defensive lock strategy continues to be in order.
Loan Originator Perspective
Bond markets were largely flat today, despite hotter than expected ISM data this AM. Sadly, “flat” doesn’t alter our recent trend towards higher rates. Until there’s definitive progress on that front, I’ll keep locking early to avoid further losses. –Ted Rood, Senior Originator
Today’s Most Prevalent Rates
- 30YR FIXED – 3.875-4.0%
- FHA/VA – 3.5%
- 15 YEAR FIXED – 3.25%
- 5 YEAR ARMS – 2.75 – 3.25% depending on the lender
Ongoing Lock/Float Considerations
- 2017 has proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016. Most of the rate spike was done by the end of 2016 and we’ve generally moved sideways to lower since then
- The biggest question is whether or not this counter-intuitive trend has an expiration date. Rates haven’t been immune from brief corrections back toward higher levels, and each correction causes concern that the good times are over.
- Despite those concerns, we’ve seen rates make new lows in April, June, and September. Although rates have been rising since early September, they’d have to move even higher before we’d consider a change in the bigger picture theme.
- All of the above having been said, past precedent suggests we’re due for a much bigger dose of volatility some time soon.
- 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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