Mortgage rates moved higher from Wednesday through the end of the week.  Thursday and Friday were especially abrupt as financial markets hurried to get in position for a potential US/China trade announcement.  What does trade have to do with the mortgage market?  Quite a lot actually!

Tariffs and general trade uncertainty have been some of the biggest driving forces behind 2019's huge drop in rates.  Downbeat economic data and eroding business confidence led investors to put more money into safer havens like the bond market.  When demand for bonds increases, bond prices move higher and bond yields (aka "rates") move lower.

The economic uncertainty also played a key role in forcing the Federal Reserve to shift its stance on rates early in the year.  While the Fed doesn't control mortgage rates directly, when traders expect the Fed to be friendlier in the future, longer-term rates 10yr Treasuries and mortgages tend to benefit preemptively.  This is really what drove the shift in rates earlier in the year while trade-related uncertainty has been helping more in recent months.

Connecting the dots, anything that happens to push back on trade-related uncertainty would logically be bad for rates.  And that's exactly what the last 2 days of the week have been!

Loan Originator Perspective

I've been in the "lock early" camp for a while now, and today's/yesterday's large losses illustrate why.  We've seemingly priced in complete tariff resolution, even before the results are announced/analyzed.  The trend is not our friend, I am locking loans closing within 45 days. -Ted Rood, Senior Originator

Today's Most Prevalent Rates

  • 30YR FIXED -3.75%
  • FHA/VA - 3.375%
  • 15 YEAR FIXED - 3.375% 
  • 5 YEAR ARMS -  3.25-3.75% depending on the lender

Ongoing Lock/Float Considerations 

  • 2019 has been the best year for mortgage rates since 2011.  Big, long-lasting improvements such as this one are increasingly susceptible to bounces/corrections 

  • Fed policy and the US/China trade war have been key players.  Major updates on either front could cause a volatile reaction in rates

  • The Fed and the bond market (which dictates rates) will be watching economic data closely, both at home and abroad, as well as trade war updates. The stronger the data and trade relations, the more rates could rise, while weaker data and trade wars will lead to new long-term lows.  
  • 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.