Mortgage Rates August 18, 2017

Mortgage rates for August 18, 2017 are set to start the day better than Thursday as the bond market had a decent rally in which the 10y yield broke below 2.21%.  30 year fixed mortgage rates should start the day below 4.00%, 15 year fixed rates below 3.25% and 7/1 ARM rates below 3.375% (conforming, zero points)-the cost to obtain these mortgage interest raterates will be lower today compared to yesterday.

Mortgage rates for some “A” level borrowers (high credit scores, low loan to home value ratio, low debt to income ratio and no cash out) are as low as 3.75% on the 30 year fixed loan program (conforming, zero points) and on the 15 year as low as 3.00% (conforming, zero points).

The 10y yield opened the day at the 2.18% level and the 30y FNMA 3.5 coupon opened the day at the 103.31 level.  Mortgage rates improved for some lenders late afternoon on Thursday however some lenders were reluctant to pass along improvements despite the rally in bonds.  Heading into the weekend these cautious lenders may still wait until Monday before improving.  Later this morning we have the Consumer Sentiment reading and is fairly light on economic data with the exception of the Durable Goods report at the end of the week.

An important question that some are asking; why are bonds rallying and mortgage rates improving?  Simply put; politics.  The Trump administration is in turmoil with many Republican leaders questioning the ability of this administrations ability to govern effectively along with an admonishment from his supporters of his handling of the events in Charlottesville.  The market appears to be concerned that this will roll over to the economy at some point and thus traders move from risk assets (stocks) to safe assets (bonds).  Buying bonds results in lower yields and usually lower mortgage rates.

A point of clarification; when someone in the mortgage industry says “Current mortgage rates have improved or are improving” it usually refers to the cost associated with a specific rate.  It takes a lot to move mortgage rates from 4.00% – 3.875% (even more to go from 4.00% – 3.75%) and generally does not happen overnight or even in a one week period.  What does happen is that the cost to obtain the 4.00% decreases and if the rally in bonds is long enough eventually terms move down to the 3.875%.

If you are looking to refinance your current mortgage or purchase a new home please be sure to give us a call at 1-800-500-5538.  We have a top rating with the Better Business Bureau and the Business Consumers Alliance.