Mortgage Rates at 3.5 Percent

By: Matthew Graham •

Mortgage rates were widely available at 3.5 percent for much of the day today.  At any other time from the middle of 2013 through the end of 2015, that's not something that very many people thought they'd be able to say (or read, or think!).   A few lenders had been dabbling in quoting conventional 30yr fixed rates of 3.5% earlier this week, but today saw a majority of lenders join that adventure--at least in the morning.  

As is often the case with financial markets, the biggest, quickest moves demand an occasional pause.  Call it a correction, consolidation, distribution, or whatever you will.  It all means the same thing.  Today it meant that the extraordinarily strong morning trading levels in the bond markets that underlie mortgage rates gave way to afternoon weakness.  By the end of the day, trading levels were right in line with yesterday's.  The bounce prompted most lenders to revise rate sheets higher in the afternoon, but few, if any, are quoting higher rates vs yesterday.

 See Rates from Lenders in Your Area

Still, it's a good wake-up call as to the potentially ephemeral nature of long-term lows.  Markets run hard.  Sometimes they can surprise you as to how hard and how fast they're willing to run.  But then at some point, the running is over, or worse: we run in the other direction.  There's no telling whether that's the case with today's intraday bounce, but it's always a risk that can factor into one's decision-making process when it comes to locking and floating.


Loan Originator Perspective

"With the recent gains we have enjoyed, I think it would be wise to look at locking in today.   All these gains could be wiped out very quickly.  Even though I favor locking today, I am optimistic that this rally can continue but we might see a little pull back going into the 3 day weekend." -Victor Burek, Churchill Mortgage


Today's Best-Execution Rates

  • 30YR FIXED - 3.5-3.625 
  • FHA/VA - 3.5%
  • 15 YEAR FIXED - 3.125
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender


Ongoing Lock/Float Considerations

  • The Fed finally hiked on December 16th, causing fears of rising rates in 2016.
  • But  global financial markets came into the new year in distress.  Now markets aren't even convinced that we'll see another Fed rate hike in 2016.  Major stock indices plummeted around the world, and investors sought shelter in the bond market.  When investor demand for bonds increases, rates fall.

  • So we're left with much lower mortgage rates despite the Fed having just begun its hiking cycle.  This paradoxical trend can continue as long as global market turmoil fuels a demand for safer haven investments.  A big bounce in oil/stock prices could mean trouble for rates--at least temporarily.

  • As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.'  Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy.  It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).