Mortgage rates managed to remain unchanged today despite the fact that underlying bond markets were stronger.  Stronger bond markets are typically associated with lower rates, but in today's case, markets had some catching up to do.

At issue is the timing of yesterday's weakness. Bond markets had lost ground throughout the day (something that can sometimes result in lenders changing rates in the middle of the day).   A few lenders indeed pulled the trigger on such "mid-day price changes," but the average lender did not. Simply put, that left the average lender with a little bit of weakness to price into today's rates. The moderate amount of improvement in underlying bond markets was just enough to offset that implied weakness, thus leaving the average lender unchanged.

The stakes remain high as tomorrow's data and events present further challenges.  The potential for volatility is higher than it was in August, and rates have generally been trending higher in September.

Loan Originator Perspective

It continues to be a very risky market to float.   Rates are trending higher mainly due to higher inflation expectations.  Tomorrow we get a read on consumer inflation.  For rates to have any chance of improving, we need the data to come in weaker than expected.  If the data confirms inflation continuing to rise, rates will continue to move higher.  So, float at your own risk...  -Victor Burek, Churchill Mortgage

Today's Most Prevalent Rates

  • 30YR FIXED - 4.625-4.75
  • FHA/VA - 4.25-4.5%
  • 15 YEAR FIXED - 4.125%
  • 5 YEAR ARMS -  3.75-4.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates moved higher in a serious way due to several big-picture headwinds, including: the Fed's rate hike outlook (and general policy tightening), the increased amount of Treasury issuance to pay for the tax bill (higher bond issuance = higher rates), and the possibility that fiscal stimulus results in higher growth/inflation.

  • Despite those headwinds, the upward momentum in rates has cooled off heading into the summer months.  This could merely be the eye of the storm, or it could end up being the moment where markets began to doubt that prevailing trends would continue.

  • It makes sense to remain defensive (i.e. generally more lock-biased) because the headwinds mentioned above won't die down quickly.  Temporary corrections can be explained away, but it will take a big change in economic fundamentals or geopolitical risk for the big picture to change.  While that doesn't necessarily mean rates have to skyrocket, there's a good chance it means rates will struggle to move much lower than early 2018 lows until more convincing motivation shows up.
  • 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.