Mortgage Rates Side-Step Ahead of Jobs Report

Mortgage rates were sideways to slightly lower today, depending on the lender.  The discrepancy stems from mid-day bond market gains that were just barely enough for a few lenders to go to the trouble of revising their mortgage rate sheets before the end of business.  In other words, if bonds were to hold in similar territory by tomorrow morning, we'd likely see most lenders offering slightly better deals.

There's a big question mark over tomorrow morning, however, due to the important jobs report set to be released at 8:30am ET.  This is traditionally the most important economic report of any given month when it comes to interest rate reactions.  While it can occasionally fail to cause a stir, it should always be respected for it's volatility-inducing potential. 

The timing of the data means that any major reaction in markets would occur before almost any lender is able to publish mortgage rates for the day.  As such, there's no guarantee that today's rate quotes will be available tomorrow.  Of course, if the data helps bonds, rates could actually be better, but the risk associated with this data is that any move (higher or lower) could be bigger than normal.

Loan Originator Perspective

Bonds caught their breath today, with a small rally recouping most of Tuesday's losses.  With rates still near one month highs, I'm playing it safe and locking loans closing within 30 days. -Ted Rood, Senior Originator

My clients continue to favor locking in once within 30 days of closing.   Bonds have fallen back below 2.88, if they can hold there, it might be worth the risk to float overnight.   I do not expect any major improvement in pricing, so may not be worth the risk, but if you like to roll the dice, it may pay off some for you. -Victor Burek, Churchill Mortgage

Today's Most Prevalent Rates

• 30YR FIXED - 4.625-4.75
• FHA/VA - 4.25-4.5%
• 15 YEAR FIXED - 4.125%
  
• 5 YEAR ARMS -  3.75-4.25% depending on the lender

Ongoing Lock/Float Considerations 

• Rates moved higher in a serious way due to several big-picture headwinds, including: the Fed's rate hike outlook (and general policy tightening), the increased amount of Treasury issuance to pay for the tax bill (higher bond issuance = higher rates), and the possibility that fiscal stimulus results in higher growth/inflation.
  
  
• Despite those headwinds, the upward momentum in rates has cooled off heading into the summer months.  This could merely be the eye of the storm, or it could end up being the moment where markets began to doubt that prevailing trends would continue.
  
  
• It makes sense to remain defensive (i.e. generally more lock-biased) because the headwinds mentioned above won't die down quickly.  Temporary corrections can be explained away, but it will take a big change in economic fundamentals or geopolitical risk for the big picture to change.  While that doesn't necessarily mean rates have to skyrocket, there's a good chance it means rates will struggle to move much lower than early 2018 lows until more convincing motivation shows up.

• 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.