It's Thursday and thus time, once again, for the weekly mortgage rate survey from Freddie Mac. Over time and in the bigger picture, Freddie's survey is an accurate way to track broad trends in rates. But because it primarily captures market movement that occurs in the first 2 days of any given week, and because that movement isn't reported until Thursday, the numbers can lag up-the-minute reality.

For those interested in up-to-the-minute reality, there's good news about mortgage rates today.  Freddie's survey shows a decline of 0.12%.  That's an uncommonly big week-over-week drop.  Accordingly, many major news outlets are reporting the 0.12% drop.  The good news is that rates improved so much today (a day not counted in Freddie's numbers) that, if nothing changed by next week, Freddie's survey number would drop by nearly 0.12% AGAIN.  

By my tally (which incorporates real-time changes in actual lender rate sheets), the average effective rate is down 0.26% from last Tuesday and 0.20% from last Wednesday.  Today, alone, brought a decline of 0.10%, making it the best day since Brexit in late June in terms of day-over-day movement.  A majority of lenders are back to quoting 4.125% on top tier conventional 30yr fixed scenarios.  A few are already back down to 4.0%.  These quotes are the lowest in more than a month.

Yesterday I said that 2017 was shaping up to be less threatening, but that we hadn't yet seen solid cause for celebration.  Today is that cause.  There are a few ways to celebrate.  On the conservative side, you could count your blessings, given the fact that lenders have been rational and fair in terms of adjusting rate sheets lower to match market improvements.  On the aggressive side, you could take today's gains as a sign of underlying strength in bond markets and "let it ride."  If you choose the aggressive option, just be sure to set a "stop-loss" level at a higher rate than today's, where you'll lock to avoid further losses.  To be sure, there is NOT a great chance of rates returning to pre-election levels any time soon.  The only question is how close they will get before hitting a wall.  

Loan Originator Perspective

Amazing rally today in rates points to the question whether this move will continue.  I would love to think it will, but as always, we must consider what has transpired in the last 2 months to interest rates.  Locking in these gains is a winning bet.  I will be locking a large portion of my pipeline today, only leaving out loans that have yet to reach specific milestones that will need an excess of 45 days to close.  At the very minimum we can say that the momentum against rates has halted for now, with the possibility of a new trend favoring lower rates.  -Gus Floropoulos, VP, The Federal Savings Bank

Very nice rally today in the bond market.   If you have been floating, there is nothing wrong with locking in the recent gains especially if you are within 15 days of closing.  Longer term closings should also consider locking but I think it might continue to be worth the risk to float to see if this rally can continue.   ADP data was weak this morning, so a weak NFP tomorrow could help this rally continue.   Personally, I like floating here. -Victor Burek, Churchill Mortgage

The bond market rally we've been waiting for arrived today, with a tepid ADP jobs report as the likely catalyst.  The numbers weren't THAT BAD, and tomorrow's NFP is the "real" report, so it appears today's trading is more momentum than data driven.  At any rate, it was a significant improvement, and treasury yields are back below 2.4% as of mid PM.  This could signal the start of a downward rate trend.  At a minimum, it makes tomorrow's action much more interesting.  It's a 50/50 call on my end:  if floating will keep you up tonight and you like today's pricing, grab it; if you're game for a little risk, ride until tomorrow and see if we can build on today's gains. -Ted Rood, Senior Originator

Today's Best-Execution Rates

• 30YR FIXED - 4.00-4.125%
• FHA/VA - 3.75%
• 15 YEAR FIXED - 3.25-3.375%
  
• 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

• Rates had been trending higher since hitting all-time lows in early July, and exploded higher following the presidential election

• Some investors are increasingly worried/convinced that the decades-long trend toward lower rates has been permanently reversed, but such a conclusion would require YEARS to truly confirm
  
  
• With the incoming administration's policies driving a large portion of upward rate momentum, mortgage rates will be hard-pressed to return to pre-election levels until well after Trump takes office.  Rates can move for other reasons, but it would take something big and unexpected for rates to get back to pre-election levels. 
   
• We'd need to see a sustained push back toward lower rates (something that lasts more than 3 days) before anything less than a cautious, lock-biased approach makes sense for all but the most risk-tolerant borrowers.  The beginning of 2017 may be bringing such a push, but there's no telling how long it will last.
   
• As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.'  Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy.  It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).