Glimmer of Hope in Rate Stability, But It Could Be a Trap

By: Matthew Graham •

Mortgage rates remained in a very narrow range near their highest levels in roughly 3 months today.  If you're into splitting hairs, we could discuss the fact that the average lender is charging microscopically lower closing costs for the same rates quoted yesterday, but most borrowers won't even see a change in rate quotes.  

The sideways momentum isn't all too surprising given that the week's biggest potential market movers are all coming out over the next 3 days.  The past 2 days, then, have been a nice reprieve from the consistently higher rates seen since June 27th.  But undertand the reprieve is not necessarily an indication of a reversal.  

Even if the coming days end up helping rates, there are lingering risks regarding the European Central Bank (ECB) policy announcement on July 20th.  It's unlikely that rates will be willing to embark on a significant move lower unless that ECB announcement is pleasantly surprising, and there's just as much chance of Unpleasantness.

 See Rates from Lenders in Your Area

Bottom line: risk-takers have seen a glimmer of hope in the recent stability, but for most borrowers, it's still a good idea to err on the side of caution.


Loan Originator Perspective

Headlines are helping bonds extend yesterday's gains.   As of about 1pm, i have only seen 1 lender issue a reprice for the better.   If you plan to lock today, it would be best to hold off until late in the day to allow your lender time to pass along some of the gains.   If i was within 15 days of closing, i would lock today but if i was closing after that, i would take the gamble and float overnight. -Victor Burek, Churchill Mortgage


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 appearing on this page are "effective rates" that take day-to-day changes in upfront costs into consideration.