Mortgage rates dropped significantly yet again today, adding to an already impressive week of improvement and bringing most lenders into their best territory since September 13th, 2018.  The average lender improved by more than an eighth of a percentage point in just the past 3 business days and by nearly 3/8ths of a point from the highs seen in early November.  This comes out to roughly $70/month for a $300k loan, or an upfront savings of $4500 if you were to buy your rate down (paying points) back in early November.

Much of the move has come courtesy of a rapid shift in expectations about the economy and Fed policy.  Investors have been worrying about the longevity of the current economic cycle more and more as it ages.  By some measures, this is already the longest economic expansion ever (and it should be, considering it follows the most profound recession in modern economic history).  The Fed has increasingly hinted at cracks emerging in the economy and the stock market just failed to break out of a rut it's been in for nearly 2 months earlier this week.  

Bonds (the financial instruments that underlie interest rates, including mortgages) thrive on this sort of fear and uncertainty.  "Thriving" means more investors are buying bonds as a safer-haven investment, and more bond buying equates to lower rates.

Tomorrow brings significant risk in the form of the big jobs report.  This is one of the pieces of economic data that the Fed watches most closely.  Investors assume that the Fed's upcoming policy changes could be directly affected by any big revelations in this report.  As such, if the numbers are much higher or lower than expected, rates could move quickly.

Loan Originator Perspective

Bonds improved sharply this morning as stocks slumped yet again.  Although yields relinquished part of the day's gains before closing, we're still at our best levels since September.  I'm locking applications closing within 30 days to preserve these gains, but will hold off on those further out.  This rally hasn't run its course yet.  -Ted Rood, Senior Originator

With bonds bouncing off 2.82 earlier today, i feel it is wise to go ahead and lock in here.   If you have been floating over the last week or so, you should be seeing an .125 to a .25 lower rate, so locking is the wise move.  Lock in the gains!! -Victor Burek, Churchill Mortgage

Today's Most Prevalent Rates

• 30YR FIXED - 4.75%
• FHA/VA - 4.25%
• 15 YEAR FIXED - 4.25%
  
• 5 YEAR ARMS -  4.375%-4.875% depending on the lender

Ongoing Lock/Float Considerations 

• Headwinds that had plagued rates for most of the past 2 years are slowly dying down.  The rising rate environment could flare up again, and some headwinds remain in effect, but the broader tone has taken a more optimistic shift.
  
  
• Highest rates in more than 7 years in Oct/Nov.  Lowest rates in more than 2 months as of early December
  
  
• This is a bit of a crossroads.  We may look back at Oct/Nov and see a long-term ceiling, or we may look back at early December and see a temporary correction before more pain.  Either way, it's one of the more hopeful positions we've been in for several years.

• 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.