Mortgage Rates Settle Down; Keep Eyes on New Year, 2017

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Mortgage rates are at their lowest points in more than two weeks!

That opening line might seem a little overexcited (note the exclamation point), but that’s the general mood of casual market followers in the wake of two consecutive days of drops. Granted, the average rates you’ll be seeing are still in the 4.25 to 4.375 percent range, but that’s a heck of a lot better than the higher ranges of 4.5 percent than we were reporting last week.

Still, it’s worth noting that this Summer’s long-lasting availability of 3.5 percent rates were among the lowest and most sustained in years. So maybe it’s a little presumptive to get excited about our current status. Just saying.

Anyway, Wednesday’s big show that was driving yesterday’s rate change, was a Treasury auction that gathered a positive response from investors. If there’s demand for government bonds, mortgage rates go lower.

In reality, however, a drop of this type has been expected for some time now, as rates have been calm for a few weeks, following the initial turmoil caused by an announcement of a rise in the Federal interest rate earlier this month. Basically, the fall in mortgage rates that we saw is more “normalcy” than an indication of trends to come. Most lenders are looking to the future for the next big move, both because of the holidays winding down and because of a certain inauguration on the horizon.

“Even though we’ve seen some nice improvements in bond markets this afternoon, we need to wait for the second week of January for any real trading confirmation,” said Gus Floropoulos, vice president at The Federal Savings Bank. “Rates might be reluctant to go higher from here, but it’s yet to be seen. I would lock in to play it safe until we see a change in momentum, until that point I believe defense is the only option.”

This is solid advice. If you’ve got clients who are ready to close, do it now while the iron is relatively hot; the difference between 4.25 and 4.5 percent is huge. And, as we’ve written before, locking in can be a huge stress-reducer for those who fear the unknown on the horizon.