Mortgage Rates Recover Some Recent Losses

Mortgage Rates Recover Some Recent Losses

Mortgage rates moved slightly lower today, recovering some of their losses from the first two days of the week. The average lender continues to quote conventional 30yr rates in a range of 3.75% to 3.875%, but today's gains bring a few of the more aggressive lenders back to 3.625% on top tier scenarios. Day over day changes are hit and miss though. Some lenders barely budged from yesterday's rates despite the gains in underlying markets.

Today's improvements were symbolically important for those who follow the broader trends in rates. This has to do with the financial concept of inflection points, which are certain levels in rates (or any other financial instrument) where rates tend to bounce rather than continue in the same direction. For instance, 3.875% is an approximate inflection point in 30yr fixed rates. We've approached it many times from above and bounced back up to the 4.0-4.25% range. In late 2012 and some of early 2015, we approached it from below and bounced back into the 3.5-3.75% range.

It's not that rates don't cross inflection points. Rather, it's the tendency to avoid crossing that is important because it means rates are less likely to return below 3.875% if they break firmly above. We just fought off such a break last week, and after yesterday, we were quickly approaching the same levels. Long story short, today's improvements mean we don't have to be quite as anxious about a sharper move toward higher rates. The other takeaway is that risk takers can continue to use that inflection point as a trigger to lock.