With US bond prices rising for the second consecutive day, mortgage rates moved significantly lower yesterday. In terms of rates, this was the first break that homeowners have enjoyed since the first part of November.
The increase in bond prices was strong enough for many lenders to eventually revise their rate sheets even lower than market conditions justified. Because of the ongoing trend toward marginally higher rates and the general volatility seen during the last two months, they have been unable to do so recently.
Nevertheless, the average mortgage provider is still quoting around 4.0% on the popular 30-year fixed-rate mortgages for borrowers with sterling credit profiles. Although that particular rate has remained unchanged during the last two months, upfront costs have been moving up and down regularly.
For most lenders, the current upfront costs associated with any specific rate are about the same as they were on November 28. To see lower costs, you will have to go back to November 8.
Mortgage expert Ted Rood pointed out that bond prices increased modestly on Wednesday while global tensions flared because of President Trump’s announcement that he was moving the US embassy to Jerusalem. Rood added that we will only know over time if that drama will have an ongoing effect on bond demand.
He went on to say that tax reform remained a big unknown, both in terms of whether it will actually be implemented and the finer details. He concluded by stating: “Treasury yields are near one-month lows. Risk-tolerant borrowers may want to see where markets go from here. Those within 15 days of closing should definitely consider locking in these gains.”
Another mortgage professional, Victor Burek, said that it was rather risky to float at the moment given the headline risk because of the tax reform bill that could hit the market at any moment. He added: “Additionally, the 10-year note does not look like it wants to go much lower than current levels. Best choice is to go ahead and lock in these gains.”
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