Mortgage rates were nicely lower on Friday, though not quite as nicely as we would hope or expect.  Why is that?  Simply put, the bond market (which underlies and most directly affects mortgage rates) suggested an even stronger improvement.  Bonds provide the raw ingredients and mortgage lenders translate those into their daily rate sheet offerings--sometimes several times a day depending on bond market volatility.

More than a few lenders adjusted their rate sheets favorably on Friday, but they were cautious in that endeavor.  This is fairly typical on Friday afternoons--especially in mid-December.  The caution was further reinforced by the volatility nature of the underlying market motivations (i.e. the reaction to the US/China trade deal news).   

Lenders were a bit more generous this morning after seeing bonds make it through the weekend with most of Friday's improvements intact.  But the gains were short-lived.  Both stocks and bonds were already in the process of moving back in the other direction after expressing some concerns about the trade deal on Friday.  That mean stock prices and bond yields were moving higher for much of the day today.  Most mortgage lenders were forced to reissue negatively-revised rate sheets by mid-day.  That took them back in line with Friday's levels in most cases.

Loan Originator Perspectives

Bond markets digested Friday's tariff postponement/agreement news today, posting moderate losses, and rates rose slightly.  I don't know how much higher they'll go from here, but seems like there's limited motivation for them to drop substantially.  I am locking new applications closing in January. -Ted Rood, Senior Originator

Today's Most Prevalent Rates For Top Tier Scenarios 

• 30YR FIXED - 3.875%
• FHA/VA - 3.375% - 3.5%
• 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.