Mortgage rates moved sharply higher today, bringing the average top tier 30yr fixed quote back to 4.25% from 4.125% previously.  That doesn't exactly mean that rates are .125%, depending on your perspective.  While the actual rate applied to loan balances is .125% higher on average, the amount of interest paid in conjunction with a mortgage is also depends on upfront costs.  In cases where borrowers are being quoted .125% higher in rate today, those upfront costs are generally lower.  If we express those costs in terms of rate, the actual day-over-day change is 0.07%.  That may not seem like much, but it's the biggest increase in well over a month.

So what's the deal?  With Trump's congressional speech yesterday and surging stock prices today, it's tempting to view the rate move against that backdrop--i.e. markets liked the speech, so they bought stocks and sold bonds (selling bonds results in higher rates).  But the bigger story for the bond market was a series of comments yesterday from several members of the Fed--particularly NY Fed President Dudley.  Long story short, investors felt like Dudley gave a compelling warning about a Fed rate hike 2 weeks from today.  Most of the negative reaction in the bond market occurred before Trump's speech, and the move was well-correlated with Fed rate hike expectations.

While the day-over-day change is bigger than we've seen recently, the net effect isn't too troubling in the bigger picture.  Rates are roughly in the middle of their narrow, post-election range.  As long as they stay there, a case can be made for either locking or floating.  For instance, locking made a lot of sense last Friday when rates were at 3-month lows.  While recent weakness creates some more opportunity for risk-takers, keep in mind that because the range is narrow, it might only take a day or two of weakness before you'd be forced to lock at a loss (which is the lesser of two evils if rates end up breaking through the ceiling of this range as opposed to the floor).