Mortgage Rates Nominally Higher, But Still Near Long-Term Lows

By: Matthew Graham •

Mortgage rates rose today, but by a small enough amount that it shouldn't crush too many hopes and dreams.  For all intents and purposes, rates remain in line with the lowest levels since November 2016.  Any movement in recent weeks has been limited to "upfront costs" as opposed to interest rates themselves.

That has the potential to be a bit confusing, so I like to break it down from time to time.  Now is one of those times!  

There are upfront costs tied to your interest rate.  They can be positive or negative.  Markets tend not to move enough for rates to change to the next .125% higher or lower (the typical gap between adjacent rate offerings).  The upfront costs allow a sort of "fine-tuning" of the overall cost of financing.  The longer the mortgage is retained, the smaller the impact the upfront costs will have on the overall cost of financing.

 See Rates from Lenders in Your Area

When markets aren't moving much, our observations of mortgage rate changes are strictly limited to these upfront costs, but we extrapolate them into rate format in order to keep things tangible.  In other words, if rates could move in 0.01% increments, that would be the extent of today's weakness.

3.875% remains the most prevalently-quoted conventional 30yr fixed rate for top tier scenarios, although quite a few lenders remain at 4.00%.   Today's upfront costs for 3.875% would be slightly higher than yesterday's.


Loan Originator Perspective

Bonds continued their slow retreat today, further confirming treasury yields are very content remaining above 2.2%.  Last week we broke 2.2%, but sadly only for a few days.  While I don't see a huge rate uptrend on the horizon, looks like last week's rates are gone.  I'm locking most loans when  within 30 days of closing.  -Ted Rood, Senior Originator

Nothing has changed for me and my clients over the last week or so.   Locking once within 30 days is what my clients are opting for.   Way to much Fed talk about tapering reinvestments in my opinion will prevent rates from moving lower.  Of course, a unexpected news event such as what happened in Spain recently can definitely change that, but for now, still favor locking.     -Victor Burek, Churchill Mortgage


Today's Most Prevalent Rates

  • 30YR FIXED - 3.875-4.00%
  • FHA/VA - 3.5-3.75% 
  • 15 YEAR FIXED - 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.