Low and Sideways, Mortgage Rates Play Waiting Game by Matthew Graham

Mortgage rates were slightly higher for the 3rd straight day, continuing a modest bounce back from the year’s lowest rates last Wednesday.  In a nutshell, bond markets (which dictate mortgage rates) reacted in a big way to last week’s political headlines, and have since been biding their time as markets wait for further developments.  In the current case, “biding time” has meant a nominal pull-back from Wednesday’s stellar levels–not uncommon in similar cases where unexpected headlines drive a somewhat panicked move in financial markets.

While the general movement in rates has been slightly higher, it hasn’t lifted rates much above 2017’s lows.  Especially when considered next to anything before last Wednesday, recent rate offerings have been low and the trend has been sideways.  Most lenders continue to offer conventional 30yr fixed rates of 4.0% on top tier scenarios.  The only difference from Friday would be marginally higher upfront costs, but several lenders are effectively “unchanged.”
Loan Originator Perspective

Bond markets idled close to unchanged today, in the absence of meaningful economic data or political drama.  It’s encouraging to see 10 year yields near 2.25%.  While we’re not at 2017 lows, we’re reasonably close.  I can’t blame anyone within 30 days of closing who wants to lock here, nor would I discourage an informed borrower with more time from floating.   –Ted Rood, Senior Originator
Today’s Best-Execution Rates

  • 30YR FIXED – 4.00%
  • FHA/VA – 3.75%
  • 15 YEAR FIXED – 3.25%
  • 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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