BY: MATTHEW GRAHAM
AUG 14, 2017
Mortgage rates rose moderately today as weekend news headlines suggested some measure of de-escalation of nuclear tensions between the US and North Korea. To be sure, the news wasn’t resoundingly conciliatory, but investors took solace in it nonetheless.
In general, when headlines suggest the world is less likely to end by Monday, investors will be slightly more risk tolerant. One expression of risk tolerant trading in financial markets is to favor something like stocks as opposed to bonds. If there is net selling pressure on bonds, it creates net upward pressure on interest rates. This was the case this morning.
In the afternoon, comments from NY Fed President Dudley (one of the 3 most important voices at the Fed) kept pressure on rates, which seemed willing to recover in the late morning hours. Dudley affirmed investors’ assumptions about upcoming Fed policy changes. Because these changes are net-negative for bond markets, they put upward pressure on rates. Because investors are quite confident in those assumptions, the upward pressure was very small in the bigger picture. Still, it was enough to prevent most mortgage lenders from considering offering improved rate sheets before the end of the day.
Loan Originator Perspective
New day/week, same deal with bond markets today, as they were virtually unchanged from Friday’s levels. It’s going to take something far more substantial than UN resolutions, threatening tweets, or tepid economic data to motivate rates here. Not sure what that will be, or when, but for now, we’re on hold. If you’re floating, have realistic expectations, best case scenario, your lender credit might improve slightly from day to day. -Ted Rood, Senior Originator
Today’s Most Prevalent Rates
- 30YR FIXED – 4.00%
- FHA/VA – 3.75%
- 15 YEAR FIXED – 3.375%
- 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.