Mortgage rates moved higher for the first time this week, ending a 3-day run at the best levels since mid-October. Today’s rates are roughly in line with those seen on November 3rd.
Compared to yesterday’s closing levels, bond markets (which dictate mortgage rates) are roughly unchanged today. That typically corresponds with relatively unchanged mortgage rates. Today’s departure from the norm is due to bond market weakness yesterday afternoon, which came on too gradually and too late in the day for most lenders to adjust rate sheets accordingly. Moreover, bond markets were actually in weaker territory this morning when lenders released today’s rate sheets. That means they had to account for yesterday’s bond market weakness as well as the additional AM weakness today.
The bounce back in bond markets (this afternoon) suggests lenders have some room to offer rate sheet improvements, but so far, only a few have made any changes. That means many lenders will have some wiggle room tomorrow morning and that rates would likely be slightly lower if bond markets don’t move much overnight.
To simplify all of the above, as we discussed yesterday, small red flags in markets translated to slightly higher rates today, and tomorrow can once again be viewed from a more neutral standpoint.
Loan Originator Perspective
Bond markets endured a challenging day today, as uncertainty on proposed US tax reforms and ECB bond purchasing tapering details befuddled traders. Despite the unknowns, MBS were virtually unchanged by early PM. Looks like our day to day swings will be negligible until actual details on tax reform are determined. With rates near their best since mid-Oct, it’s a great time for risk averse borrowers to pull the rate lock trigger. –Ted Rood, Senior Originator
Today’s Most Prevalent Rates
- 30YR FIXED – 3.875-4.0%
- FHA/VA – 3.75%
- 15 YEAR FIXED – 3.25-3.375%
- 5 YEAR ARMS – 2.75 – 3.25% depending on the lender
Ongoing Lock/Float Considerations
- 2017 had 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.
- While rates remain low in absolute terms, they’ve moved higher in a more threatening way heading into the 4th quarter, relative to the stability and improvement seen earlier in 2017
- The default stance for now is that this trend toward higher rates has the potential to continue. It will take more than a few great days here and there for that outlook to change.
- For weeks, this bullet point had warned about recent stability inviting a bigger dose of volatility. That volatility is now here. As such, locking is generally the better choice until the volatility is clearly dying down.
- 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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