US mortgage rates recorded a modest increase on Monday, which brought the average lender back to the rate levels seen last Wednesday. The bond markets, which steer the movement of mortgage rates, had suggested that the rate increase would be larger. However, timing may have been the reason for the modest increase. While bonds trended weaker throughout the day, a few lenders made changes to their rate sheets during the afternoon.
For the last few months, 4.0% has been the most often-quoted rate for top-tier, conventional 30-year, fixed-rate mortgages. While most discussions during that period said that mortgage rates were increasing or decreasing, the only components that were actually moving were the upfront closing costs that were being charged with those rates.
While it is common for rates to remain relatively flat as the year draws to a close, the rates began to flatten out in the latter part of September this year. This means there is a greater potential for a larger rate movement when they finally break out beyond the recent narrow range they’ve been in.
US mortgage expert Ted Rood attributed yesterday’s relatively flat rates (despite the bond market experiencing minor losses) to the fact that it is virtually certain that Congress will pass the tax reform bill this week. He believes that unless there is some unexpected major development with North Korea or the ongoing investigation of Russian meddling in the US presidential election, the bond market will not fluctuate very much for the remainder of the year.
Mortgage expert Victor Burek agreed with Rood’s analysis of the tax bill’s impact. He said: “It appears it’s a done deal, so hopefully it has been fully priced in. With year-end approaching and many traders already on vacation, I do not see a major rally coming that will improve rates. So if closing within 30 days, I would go ahead and take advantage of today’s rate sheet then enjoy the holidays.”
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