Mortgage rates moved lower at their best pace in several weeks today, with the average lender making it back to levels not seen since April 12th. The gains were bigger than normal for two reasons. First, bond markets had improved slightly yesterday afternoon, but not enough for lenders to adjust their rate sheet offerings for the better. Thus, they had to play a bit of catch-up with this morning’s rate sheets. The bigger factor was the additional bond market strength seen throughout the overnight trading session and well into the domestic trading hours.
In general, bond market “strength” means that bond prices are moving higher and bond yields (or “rates”) are moving lower. Whereas trading values in the bond market change frequently throughout the day, the average mortgage lender tries to publish its rates once per day and only adjust them if bonds move by a certain amount intraday.
Most of the data responsible for the big move in bonds had to do with various facets of global growth. Economic reports and other news that speaks to global growth will continue to be a key consideration for bonds and rates. With that in mind, the next 7 business days are much more action-packed than anything seen so far this week. That increases the risk of volatility, but as today shows, volatility isn’t necessarily a bad thing.
Loan Originator Perspective
Bonds posted gains today, continuing their mini-run down from recent rate highs. It’s not a trend yet, but at least helps solidify our range. Dovish Australian inflation data, of all things, helped spark the rally. I’m locking loans closing within 30 days, floating most of those closing further out, depending on clients’ risk tolerance. –Ted Rood, Senior Originator
Today’s Most Prevalent Rates
- 30YR FIXED – 4.25-4.375%
- FHA/VA – 4.0%
- 15 YEAR FIXED – 4.00%
- 5 YEAR ARMS – 3.875-4.25% depending on the lender
Ongoing Lock/Float Considerations
- Early 2019 saw a rapid reevaluation of big-picture trends in rates and in markets in general
- The Federal Reserve has been a key player, and while they aren’t the ones pulling the global economic strings, their response to the economy has helped rates fall more quickly than they otherwise might.
- Based on the Fed’s laundry list of concerns, their current outlook for rate hikes and economic growth, and their bond-buying policy shifts, we’ve all but certainly seen the highest rates of this economic cycle in late 2018.
- Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders. The rates generally assume little-to-no origination or discount except as noted when applicable. Rates appearing on this page are “effective rates” that take day-to-day changes in upfront costs into consideration.