More Rise In Rates

More Rises In Rates….

Mortgage rates were moving higher this week as the bond markets continued a semi-weaker trend for April.  Bonds (which factor in determining rates) are under pressure for various reasons.  Rates responded in a fairly big way in Jan/Feb, but have basically been “on a break” since.

Rates haven’t moved much during this little “break,” as most borrowers are 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.

Recent moves in bonds have brought 10-year treasury yields to their highest levels since late March.  While this in itself doesn’t rekindle the same kind of drama seen in the first couple months of the year, it is bringing about questions as to whether we’re headed back in that direction or not.  Were the past 2 months just a short reprieve?  There’s no way to know the answer honestly.  There’s also no real change to lock/float strategy, which has been lock-biased since mid-December.

Loan Originator Perspective

The continued volatility is still favoring locking at origination to avoid clients being let down.

Treasury yields jumped to 2.87%, near a one month high last week.  The Originators of Seattle Mortgage Brokers have been locking early.  The trend is still not our friend.

Ongoing Lock/Float Considerations

• 2017 proved to be a fairly prosperous year for mortgage rates despite the 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 most frightening 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.

*This article does not represent legal interpretation or advice. This is not a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet LTV requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines, and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over life of loan. Reduction in payments may reflect longer loan term. Terms of the loan may be subject to payment of points and fees by the applicant. NMLS: LO# 305371 MB# 761615