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Rate Watch

The posted 5-year rate reduction last week has all the trappings of a headfake. Man, how we hope we’re wrong about that.

5-year yields closed up huge on Monday and discounted fixed rates should follow if yields don’t drop soon. A few non-bank lenders have already announced fixed-rate increases, effective today.


Regardless of your position on the fixed vs. variable debate, it can’t be overstressed how low fixed rates are right now. At 3.39% for a 30-day close, 5-year fixed mortgages are a whopping 166 basis points below the 10-year average of deep-discount rates (which we’ve based on a 160 bps discount off posted rates for discussion purposes). Locking in at 3.39% is like winning a small lottery, historically speaking.

So if you need a fixed rate for a new mortgage closing in the next 180 days, be prepared to act—especially if yields continue higher.


Disclaimer: As always, only higher powers from above can predict interest rates. It’s always possible that yields could tumble back down. On the other hand, mortgages are a probability game and most would argue that rate risk is biased over 50% to the upside.

By Robert McLister