Mortgage rates have generally been moving higher since March 28th after they bottomed out at the lowest levels in well over a year. At the time, investors were tuned-in to the Fed’s concerns about the global economy. Granted, the US economy might not have been suggesting an imminent recession, but that was far more difficult to say about China and Europe. Both economies were clearly decelerating by the end of 2018 and into the first few months of 2019. That deceleration was the biggest risk factor for the global economy and the biggest boon for mortgage rates.
Weak European economic data at the end of March helped drive the long-term low rates on March 27th. But that marked the apex of panic. We haven’t seen any data quite as alarming since then and thus, the gradual increase in rates (economic strength correlates with higher rates, all other things being equal). Beginning last Friday, data in China suggested economic recovery/stability. Rates didn’t like it, and they surged higher at their fastest pace in months.
Today’s data out of Germany suggests the EU isn’t as close to being out of the woods. European bond yields (aka “rates”) dropped quickly overnight, and that set the tone for US bond yields for the day. Whether or not this spells defeat for the weeks-long uptrend in rates remains to be seen. With bond markets closed tomorrow and the tendency for idiosyncratic trading on the day before a 3-day weekend, we can’t count those chickens just yet. Still any reprieve from rising rates is a good thing, even if today’s improvement is best classified as “modest.”
Loan Originator Perspective
Rates retreated slightly from their recent high levels today, as markets closed early for the extended Easter weekend. Next week doesn’t bring much notable economic data until Thursday, and lenders typically price conservatively going into extended weekends, so I’m not a huge fan of locking on them. Folks closing within 30 days who are happy with current pricing, however, may want to take risk off the table and lock their rate. –Ted Rood, Senior Originator
Today’s Most Prevalent Rates
- 30YR FIXED – 4.25%
- FHA/VA – 4.0%
- 15 YEAR FIXED – 3.875-4.00%
- 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.