Mortgage Market Summary as of November 20, 2017

Mortgage Rates Unchanged Heading Into The Thanksgiving Holiday Week.

Mortgage rates barely budged last week.  The average lender is quoting conventional 30 year fixed rates of 4.00% or slightly lower for top tier scenarios.  Movement has been minimal since October with day-over-day change most frequently occurring at the "cost" level.  

In other words, bond markets don't move enough every day for lenders to change interest rates by their standard 0.125% increments.  Instead, the cost (or rebate) associated with any given rate serves as a fine-tuning adjustment.  The cost is typically calculated based on a percentage of the loan amount.  It can move by more than half a perfect in some cases ($500 for every $100,000 borrowed) before it would make sense for some borrowers to consider the next higher or lower rate.

With this week bringing the Thanksgiving holiday and with no possibility of significant tax reform news (congress is out until the following week), markets will be hard-pressed to find much motivation for movement.  The risky thing about these periods of lighter participation and lower conviction in financial markets is that they can result in unexpected and seemingly unjustified volatility.  Lenders also tend to be less aggressive when it comes to offering better rates following bond market improvements.  That generally decreases the benefits of floating in the near term.

Courtesy of Rick Lombardo 310.435.7439, Rick.Lombardo@grarate.com, VP of Mortgage Lending at Guaranteed Rate.

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