Super Low Rates Had a Big Impact, But Now They’re Moving Back Up

News

Mortgage rates resumed a week-long move higher today, bringing them to the highest levels since March 19th or 20th, depending on the lender.  Between now and then, they’d fallen abruptly to the best levels in more than 15 months.  The improvements were meaningful enough to draw out refinance applicants in droves according to weekly mortgage app data released by the Mortgage Bankers Association (MBA) this morning.  On an even more impressive note, the MBA’s count of purchase applications was at its highest level in nearly a decade!

While we can’t give low rates all the credit for fueling the purchase side of the mortgage market, they’re clearly helping.  Actually, I should clarify: they clearly HELPED… (past tense).  Granted, today’s rates are still much lower than those seen in February and the early March, but they’re no longer so impressively low so as to create a major sense of urgency among prospective borrowers.

What’s the damage?  Over the past few days, depending on the lender and scenario, a 30-yr fixed rate quote could be as much as a quarter of a percentage point (0.25%) higher.  This would increase the payment on a $300,000 loan by $43/month.  

Will the bad times continue?  Any person or website suggesting better than a 50/50 chance at predicting the near-term future of rates is a dangerous thing.  While I can tell you that mortgage rates will almost certainly be significantly lower than they are today at some point in the next 3 years, I wouldn’t dare try to convince you of their probably movement over the next 3 days.  In any event, it will likely have a lot to do with the economic data that comes out through the end of the week as well as important news headlines concerning major market uncertainties (Brexit, US/China trade relations, etc.).

Loan Originator Perspective

Last week’s 2.4% yields are ancient history now,  as bonds sold off despite tepid manufacturing/employment data.  I’m solidly back to “lock at application” for loans closing within 45 days, unless clients have a penchant for risk.    –Ted Rood, Senior Originator

Today’s Most Prevalent Rates

  • 30YR FIXED – 4.125-4.375%
  • 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.

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