Mortgage rates were mostly flat again today, despite bond market weakness (lower bond prices generally mean higher rates). Between MBS (the mortgage-backed-securities that underlie mortgage rate movement) and US Treasuries (the risk-free benchmark for all US debt/bonds), the latter fared worse. In other words, mortgage bonds outperformed Treasuries. That’s one of the reasons we didn’t see much movement in mortgage rates today.
The other reason was as simple as the shape of market movement on Friday. Bonds improved throughout the course of the day but most lenders didn’t adjust rate sheets to reflect that improvement. As such, today’s weaker bond market levels ended up being fairly close to those that were in effect when lenders last set rates on Friday morning.
The absence of change continues to be a good thing given that rates remain very close to their lowest levels in more than 8 months. Only a handful of recent days have been any better. 4.0% is the most prevalently-quoted conventional 30yr fixed rate on top tier scenarios, though a few of the aggressive lenders remain at 3.875%.
Today’s Most Prevalent Rates
- 30YR FIXED – 3.875-4.00
- FHA/VA – 3.5-3.75%
- 15 YEAR FIXED – 3.125-3.25%
- 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.
BY: MATTHEW GRAHAM