Mortgage Rates Hold Steady Despite Fed’s Warning
January 3, 2018

Mortgage rates were unchanged to slightly lower today, depending on the lender.  Merely holding steady is a victory today.  Reason being: bond markets (which dictate rates) weakened yesterday.  That implied higher rates ahead.  Lenders had the choice to change yesterday’s rate sheets for the worse or to wait until this morning to make the adjustments.  Very few issued reprices yesterday.  In other words, this morning’s rate sheets needed the overnight bond market strength in order to hold steady.

Fortunately, that strength was just enough for the average lender to remain in similar shape to yesterday or better.  There were a few brief spats of intraday market volatility, but none were sufficient to prompt any rate changes from mortgage lenders.

The Fed released the Minutes from its last policy meeting.  These suggested the Fed had a deeper conversation regarding the impact of tax reform than conveyed in the official policy statement.  In general, to whatever extent the Fed feels like it needs to combat a hotter-running economy, it would be more willing to hike rates.  Markets reacted with weakness in shorter-term bonds (because the Fed Funds Rate has the most impact on the shortest-term debt).  The weakness (aka, higher yields on stuff like 2yr Treasury Notes), didn’t translate to the longer-term bonds that dictate mortgage rates.

Loan Originator Perspectives

Bonds staged a modest rally today, and my pricing improved marginally over yesterday’s.  Inflation data released this AM exceeded expectations, and made the gains more meaningful, Minutes from the Fed’s December meeting released this PM didn’t impact markets.  I’m still on “lock early” mode, and will continue to be until motivation for a market rally arises. –Ted Rood, Senior Originator
Today’s Most Prevalent Rates

  • 30YR FIXED – 4.0%-4.125%
  • FHA/VA – 3.75%
  • 15 YEAR FIXED – 3.375%-3.5%
  • 5 YEAR ARMS –  2.75 – 3.25% 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.

30 Year Fixed Rate Mortgage

15 Year Fixed Rate Mortgage

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Today’s Rates
Best Execution
Rate Change
30 Yr FRM 4.05% +0.00
15 Yr FRM 3.39% +0.01
FHA 30 Year Fixed 3.75% +0.00
Jumbo 30 Year Fixed 4.20% +0.00
5/1 Yr ARM 3.20% -0.02
Average Mortgage Rates
Rate Points Change
15 Yr. Fixed 3.45% 1.22 -0.02
30 Yr. Fixed 4.14% 1.32 -0.01
MBA **
30 Yr. Fixed 4.06% 0.38 -0.05
15 Yr. Fixed 3.34% 0.38 -0.02
30 Yr. Jumbo 3.96% 0.20 -0.04
30 Yr. FHA 3.98% 0.35 -0.04
5/1 ARM 3.14% 0.31 -0.12
Freddie Mac **
30 Yr. Fixed 3.94% 0.50 +0.01
15 Yr. Fixed 3.38% 0.50 +0.02
1 Yr. ARM 2.68% 0.20 +0.01
5/1 Yr. ARM 3.39% 0.30 +0.03
* FHFA averages are updated monthly.
** Mortgage Bankers Association (each Wednesday) and Freddie Mac (each Thursday) averages are updated weekly.
Secondary Markets
Price Change
30YR FNMA 3.0 100.00 +0.22
30YR FNMA 3.5 102.70 +0.14
30YR GNMA 3.0 100.67 -0.20
30YR GNMA 3.5 103.27 -0.19
15YR FNMA 3.0 101.84 +0.06
15YR FNMA 2.5 99.84 +0.08
Yield Change
2 YR 1.9353% +0.0122
5 YR 2.2465% -0.0016
10 YR 2.4489% -0.0126
30 YR 2.7863% -0.0226
Prices as of: 1/3/2018 4:58PM EST
MBS and Treasury data provided by Thomson Reuters.
Mortgage News Daily and MBS Live!are exclusive re-distributors of Real Time Thomson Reuters Mortgage Information.
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About This Report

Mortgage News Daily is a trusted source of mortgage rate market data and analysis, with over 1 million readers each month. Unlike many rate surveys, our survey is conducted on a daily basis and is designed to bring you the most current and accurate rate data available.  We use a proprietary formula to calculate averages based on best-execution rates from top lender’s rate sheets, also taking into account feedback from hundreds of mortgage market professionals around the country.