Market Trends
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Worst 5 Days For Rates Since The Election
- 07/03/17
Mortgage rates continue rising at an uncomfortable pace for anyone in the market to buy or refinance. Today was the 5th straight day of quicker-than-average movement higher and it leaves the average lender at the highest levels in nearly 2 months.
Whether or not this is as dramatic as it sounds depends on your perspective. While it's true that the past 5 days have been the worst since the US presidential election, it's also true that interest rates are just over an eighth of a point higher during that time. An eighth of a point (.125%) will cost you about 14 bucks a month on a $200k loan. Alternatively, it would cost you $1200-$1600 in cash to get the rate back down to levels from 5 days ago on the same loan amount.
For years, lenders have capitalized on the psychology of "monthly payments." $14/mo doesn't sound like too much when it comes to a $200k home loan. But consider going out of town for a week and coming back to find your closing costs roughly $1400 higher simply to keep the same quote you had last week. For most, the $1400 upfront cost is the more effective way to communicate the true change in cost.
Bond markets and mortgage lenders will be closed tomorrow for the Independence Day Holiday. The safest strategy is to assume the current weakness will continue until we see a definitive bounce.
Today's Most Prevalent Rates
30YR FIXED - 4.125%
FHA/VA - 3.75%
15 YEAR FIXED - 3.375%
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 Still Flat at 8-Month Lows
- 06/26/17
Mortgage rates were steady to slightly lower today, depending on the lender. Underlying financial markets continue moving in a narrow range--something that's not uncommon for the first few weeks of the summer. It's that market movement that can result in mortgage lenders issuing mid-day reprices. The more volatile and the bigger the moves, the more likely lenders are to reprice. Today saw zero reprices.
Rates may have risen this morning were it not for weaker economic data. In general, weaker data tends to drive demand for the safe-haven of the bond market (which results in lower rates). This morning's Durable Goods data was noticeably weaker, and bonds improved immediately following its release at 8:30am. Though the improvement in markets was modest, it meant that most lenders were looking at bond prices that were at least as good as last Friday's.
Despite today's relative lack of change, the potential for movement is generally higher heading into the rest of the week. Risk-averse borrowers should consider that we're effectively at the lowest rates in more than 8 months. Risk-tolerant borrowers should simply make sure they have a stop-loss in place (in terms of how much rates could rise before locking at a loss) and a game plan established with their loan originator.
Loan Originator Perspectives
It must be summer, as bond markets continued slumbering, with rates virtually unchanged today. The rest of the week MAY bring some minor pricing improvements due to month end demand, but hard to hope for much more than that. If you're floating, have realistic goals for your pricing; it's unlikely we'll see rates move substantially before the end of next week (if then). I'm not in a big hurry to lock new loans, particularly those closing in August. - Ted Rood, Senior Originator
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.
June 20, 2017
- 06/20/17
Mortgage rates were steady to slightly lower today, with underlying bond markets essentially erasing the damage seen yesterday. This was neither here nor there for the mortgage world as most lenders didn't adjust rates much higher yesterday (despite bond weakness).
Thus, they didn't have much to do today when bonds strengthened. In general "bond market strength" = lower rates and vice versa.
There were no significant economic reports or major market-moving headlines today--at least not for rates. Oil prices and political headlines might make the evening news, but neither were directly responsible for the bond market improvement.
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%.
Loan Originator Perspective
I am finding most clients are wanting to lock in at current pricing. Bonds continue to hold in our recent downtrend. With the downtrend still intact, i think floating for now is the way to go. If you want to lock today, I would hold off until as late as possible to allow lenders to pass along today's gains. - Victor Burek, Churchill Mortgage
Bond markets posted small gains this AM, then built on them as of mid PM trading. My rate sheets (issued in the morning) were virtually identical with yesterday's. There weren't any significant economic data or global drama events prompting the advances, which can signal strong demand for bonds. Keep in mind, the variations we're seeing here aren't life altering, will influence lender credits more than actual rates. Since most lenders didn't reprice better during the day, I favor floating overnight to see what tomorrow's rates look like. - Ted Rood, Senior Originator
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.