You Thought Yesterday Was Bad For Mortgage Rates?

By: Matthew Graham

If you thought yesterday was bad for mortgage rates, you're probably not going to be a big fan of today either.  And since today is the end of a week, we could similarly say you won't like this week if you didn't like the previous example.  That's been true all year so far.  And hey!  Those week's add up to a month (we'll give yesterday and today a pass and consider them to be in the first month of 2018) so we can also say if you didn't like the last month of 2017, you're really going to hate the first month of 2018. 

So what's going on?  Nothing outside the ordinary.  The only problem is that "the ordinary" has involved bond market participants looking for almost every opportunity to sell bonds, thus pushing rates higher.  Today's focal point was the big jobs report in the morning.  This data traditionally packs a big punch but it hasn't been a big market mover recently.  That appeared to change today, but the rate spike had more to do with the fact that traders were intent on pushing rates higher anyway and simply waiting to make sure the jobs data didn't throw a wrench in the works.  Granted, there was no way to know this would happen before it happened, but in any event, our default stance has been to assume rates will continue higher until they give us clear evidence to the contrary.  Needless to say, we're nowhere close to amassing any such evidence after days like today.

Rates are now officially at the highest levels in more than 4 years.  The average lender is in the mid 4 percent range when it comes to quoting conventional 30yr fixed rates for well-qualified borrowers. 

Loan Originator Perspective

Bonds finished a dismal week with a down day Friday, as a strong jobs report did nothing to stem the rising rate tide.  I just priced a loan I hadn't looked at in a week, and rate was nearly .5% higher than last time.  Anyone contemplating a loan needs to act now, or be prepared for substantially higher rates/costs later.  Rates will level off at some point, but show no sign of doing so yet.  #LOCKEARLY -Ted Rood, Senior Originator

Until further notice, LOCK!!  Floaters have been punished severely over that last few weeks.  -Victor Burek, Churchill Mortgage

Today's Most Prevalent Rates

  • 30YR FIXED - 4.375-4.5%
  • FHA/VA - 4.0-4.25%
  • 15 YEAR FIXED - 3.625-3.75%
  • 5 YEAR ARMS -  3.0-3.5% depending on the lender

Ongoing Lock/Float Considerations

  • 2017 had 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. 

  • While rates remain low in absolute terms, they moved higher in a more threatening way heading into the 4th quarter, relative to the stability and improvement seen earlier in 2017

  • The default stance for now is that this trend toward higher rates has the potential to continue.  It will take more than a few great days here and there for that outlook to change.

  • For weeks, this bullet point had warned about recent stability inviting a bigger dose of volatility.  That volatility is now here.  As such, locking is generally the better choice until the volatility is clearly dying down.
  • 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.