Mortgage Rates Rocked (Relatively) By Tax Plan Optimism

By: Matthew Graham •

Mortgage rates moved higher today as financial markets grew more optimistic about the potential for tax reform.  Late last night, the Senate passed a resolution that included language designed to make tax reform legislation easier to pass.  In a nutshell, it means the Senate only needs 51 votes as opposed to 60 when it comes time to consider a tax bill.

Stocks like tax reform.  They moved quickly higher in futures trading.  Bonds (which dictate rates) aren't too thrilled with the idea for several reasons.  They moved quickly lower in price, which equates to upward movement in terms of rates.

Despite a fairly abrupt move in underlying trading levels, lenders' rate sheets weren't apocalyptically damaged.  The average lender continues to quote rates that are roughly similar to those seen on October 10th, with 4.0% remaining the most prevalent conventional 30yr fixed rate on top tier scenarios.  

 See Rates from Lenders in Your Area


Loan Originator Perspective

Bond markets regressed again today, as tax reform momentum built amid chatter on Pres. Trump's Fed nominee(s).  My pricing didn't suffer as much as raw bond prices did, but will next week if markets don't rebound.  I've been in "lock early" mode, and that's not changing.  There's far too little incentive for rates to drop, and far too much potential inflationary prospects.  Lock early. -Ted Rood, Senior Originator


Today's Most Prevalent Rates

  • 30YR FIXED - 4.0%
  • FHA/VA - 3.5% 
  • 15 YEAR FIXED - 3.25%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender


Ongoing Lock/Float Considerations

  • 2017 has proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016.  Most of the rate spike was done by the end of 2016 and we've generally moved sideways to lower since then

  •  The biggest question is whether or not this counter-intuitive trend has an expiration date.  Rates haven't been immune from brief corrections back toward higher levels, and each correction causes concern that the good times are over.

  • Despite those concerns, we've seen rates make new lows in April, June, and September.  Although rates have been rising since early September, they'd have to move even higher before we'd consider a change in the bigger picture theme.

  • All of the above having been said, past precedent suggests we're due for a much bigger dose of volatility some time soon.  
  • 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.