Mortgage rates continued lower today as political uncertainty sparked the biggest day of stock market losses since the election. In general, short term pain for stocks benefits bonds. When demand for bonds increases, rates move lower. Today was no exception. Bond yields (which correlate with mortgage rates) fell in lock-step with stocks in the late morning hours.
Today’s improvement makes for a nice addition to several days of lower rates. In less than a week, rates have fallen quickly from 3 year highs to the lowest levels of the month. The average lender is still quoting conventional 30yr fixed rates of 4.25% on top tier scenarios, but with lower upfront costs today. Several of the more aggressive lenders are already back down to 4.125%, and fewer laggards remain at 4.375%.
Loan Originator Perspectives
As we saw yesterday, bond markets continued to rally today, and at a more vigorous pace than last week. US economic growth/fiscal reform concerns are boosting bond demand. While we’re still nowhere near our post election rate lows, at least we’re seeing rates trend downward. There’s nothing wrong with carefully floating here, unless doing so will cost you sleep. Of course, the assumption is that your loan officer is available and watching rate markets to advise you if rates reverse their trend lower. -Ted Rood, Senior Originator
Today’s Best-Execution Rates
– 30YR FIXED – 4.25%
– FHA/VA – 4.0-4.25%
– 15 YEAR FIXED – 3.5-3.625%
– 5 YEAR ARMS – 2.75 – 3.25% depending on the lender
Ongoing Lock/Float Considerations
– Some investors are increasingly worried/convinced that the decades-long trend toward lower rates has been permanently reversed, but such a conclusion would require YEARS to truly confirm
– Still, it would take something very big and unexpected for rates to make a big, sustained push back toward pre-election levels. Even then, it would take time to confirm such a shift.
– With fiscal and monetary policy paths both clearly putting pressure on rates, at least one of those would need to make a noticeable change before anything but a cautious, lock-biased approach makes sense as a baseline strategy. Floating should only be considered as a tactical opportunity to capitalize on temporary corrections.
– 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.