April 18, 2018
Mortgage rates moved higher today as bond markets continued a mildly weaker trend for the month of April. Bonds (which underlie rates) are under pressure for a variety of reasons. The most notable headwinds are longer-term and bigger-picture. Rates responded to these headwinds in a fairly big way in Jan/Feb and have basically been “taking a break” since then.
Rates have moved very little during this “break,” with most borrowers being quoted the same NOTE rate on any given day in the past 2 months. Upfront costs have been the only way the modulate the EFFECTIVE rate of the average lender’s 30yr fixed quote.
Today’s move in bonds brings 10yr Treasury yields to their highest levels since March 21st. While this, in and of itself, doesn’t rekindle the same sort of drama seen in the first 2 months of the year, it’s raising questions as to whether or not we’re headed back in that direction. Were the past 2 months just a temporary reprieve? The eye of the storm? There’s no way to know the answer today. There’s also no change to lock/float strategy, which has been generally lock-biased since mid-December.
Today’s Best-Execution Rates
|Conventional 30 Yr fixed||4.50%||+0.01|
|Conventional 15 Yr fixed||3.90%||+0.01|
|FHA/VA 30 Year Fixed||4.28%||+0.03|
|Jumbo 30 Year Fixed||4.52%||+0.02|
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 beginning of 2018
- The scariest part of the move higher looks like it ended as of early February, and rates have been generally sideways since then
- Even so, the potential remains for more weakness (i.e. higher rates). It makes more sense to remain defensive (i.e. more inclined to lock) until we’ve seen a more convincing shift lower.