Mortgage rates stood a very decent chance to experience the highest volatility of the week today thanks to the most important economic data of the week being released this morning.  The Consumer Price Index (CPI) is the most widely-followed inflation metric in the U.S. and inflation is a big deal for the bonds that underlie rates (including mortgages).  On numerous occasions over the past 2 years, we've witnessed clear connections between variations in CPI data and subsequent volatility in rates.

But not today...

The biggest issue today was that CPI ended up being pretty boring.  In other words, the actual numbers were very close to the forecast.  Bonds (and thus, interest rates) didn't have much of a reaction.  Even then, we may well wonder how big of a reaction we would have seen if the data was a bit more exciting.  As is the case so many times in July and August when it comes to the rates market, excitement quickly becomes the underdog compared to a slow summertime trading environment.  

Today's Most Prevalent Rates

• 30YR FIXED - 4.625-4.75
• FHA/VA - 4.25-4.5%
• 15 YEAR FIXED - 4.125%
  
• 5 YEAR ARMS -  3.75-4.25% depending on the lender

Ongoing Lock/Float Considerations 

• Rates moved higher in a serious way due to several big-picture headwinds, including: the Fed's rate hike outlook (and general policy tightening), the increased amount of Treasury issuance to pay for the tax bill (higher bond issuance = higher rates), and the possibility that fiscal stimulus results in higher growth/inflation.
  
  
• Despite those headwinds, the upward momentum in rates has cooled off heading into the summer months.  This could merely be the eye of the storm, or it could end up being the moment where markets began to doubt that prevailing trends would continue.
  
  
• It makes sense to remain defensive (i.e. generally more lock-biased) because the headwinds mentioned above won't die down quickly.  Temporary corrections can be explained away, but it will take a big change in economic fundamentals or geopolitical risk for the big picture to change.  While that doesn't necessarily mean rates have to skyrocket, there's a good chance it means rates will struggle to move much lower than early 2018 lows until more convincing motivation shows up.

• Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders.  The rates generally assume little-to-no origination or discount except as noted when applicable.  Rates appearing on this page are "effective rates" that take day-to-day changes in upfront costs into consideration.