Mortgage rates improved modestly today as markets digested tax bill headlines and the confirmation hearing for new Fed Chair Jerome Powell.  As the head of the institution that has the biggest impact on short-term rate momentum, Powell is an important figure.  Markets already felt like they knew him pretty well, but today was his first time in the hottest of seats (fielding questions from US Senators seeking to advance some political agenda almost completely unrelated to Powell’s new job duties). 

Not only did Powell handle himself well, but he struck a more rate-friendly tone than was generally expected.  Bond markets (which underlie day-to-day rate movement) liked what they heard, as did stocks (which also benefit from easier Fed policy). 

The afternoon was dominated by tax bill headlines which put pressure on rates to move back up.  By the end of the day, the volatility left bond markets largely unchanged.  Lenders put out rate sheets in the morning that were slightly better than yesterday’s and only a few of them repriced to higher rates in the afternoon (not quite enough weakness in bonds for widespread reprices). 

Loan Originator Perspective

Bonds were nearly unchanged this afternoon, despite a Fed member’s dovish inflation comments and a North Korean missile launch.  My rate sheets improved slightly, and the trend (as non-committal as it is) appears to be our friend.  I doubt we’ll see any major moves until the tax reform bill’s prospects are clarified.  FHFA (Fannie/Freddie’s governing entity) did announce loan limits would increase to $453,100 in 2018, a welcome change for borrowers in high priced markets.  Floating MIGHT bear minor gains, locking removes the risk of losses.  Flip a coin, for now.   –Ted Rood, Senior Originator

Like yesterday, I continue to favor floating for now.   We do get GDP data tomorrow which can move the markets, but the more important data is coming Thursday with the release of consumer inflation.  Bonds are holding up very well today in a pretty tight range waiting for motivation to move.    –Victor Burek, Churchill Mortgage

Today’s Most Prevalent Rates

  • 30YR FIXED – 4.0%
  • FHA/VA – 3.75% 
  • 15 YEAR FIXED – 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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