30 Year Fixed
3.58%    -0.02
15 Year Fixed
3.25%    -0.05
10YR Treasury
1.56%    +0.0606
FNMA 30YR 3.5
102.69    -0.13
FNMA 15YR 2.5
102.47    +0.03
Mortgage Rate Weirdness May Be Working in Your Favor Today
August 16, 2019

Things have been weird enough for mortgage rates recently that we were forced to add a "Temporary Note on Mortgage Rate Inconsistency" to our daily coverage recently.  It will likely return before too long, but with a few edits for clarity.  Edits will also need to account for days like today, which offered a prime example of how the inconsistency can be corrected.

There's a decent chance those first 3 sentences are confusing and/or relatively meaningless, so let's change that!

Mortgage rates aren't the only rates out there.  They exist in an ecosystem with more established players like US Treasury yields.  They move so much like Treasury yields that even very smart people mistakenly believe Treasuries (specifically, the 10yr) dictate mortgage rates.  Recently though, mortgage rates have moved in the opposite direction from Treasuries at times, or simply haven't fallen remotely as much as past precedent would suggest.

The reasons for the discrepancies have to do with the fundamental differences between mortgages and Treasuries as investments.  Simply put, a mortgage can be paid off any time whereas Treasuries are guaranteed to stick around.  If you invest in a mortgage that's paying a certain rate of return, you're hoping rates don't fall so fast that your borrower refinances. 

This plays out time and again in an environment like this, however, and it costs investors so much money so quickly that they immediately become less interested in buying mortgages.  As such, rates have to move higher to keep investors interested.  Fortunately, rates only need to rise RELATIVE to stable Treasury benchmarks.  In other words, mortgage rates are still at long-term lows, but Treasury yields have moved MUCH lower, much faster.

Mortgages CAN catch up and we finally saw a great example of that this week.  Despite Treasury yields being noticeably higher compared to yesterday afternoon, the average lender was offering lower mortgage rates.  This was made possible by the fact that Treasury yields stopped moving relentlessly lower today.  They were also much less volatile than yesterday.  Both of these things help sooth investor concerns when it comes to buying mortgages.  

This is all well and good for today, but there's no telling how prevalent it will be next week.  Either way, no one should expect that the paradoxical mortgage rate movement is over, even if we may start to see a winning day here and there.


Loan Originator Perspective

It was a flat Friday to close out a crazy week for bond markets.  Treasury yields remained near 1.5%, a level few, if any, anticipated just days ago.  Mortgage rates still haven't caught up with bonds' gains, but some stable days will help solve that.  I'm in no hurry to lock loans closing over 30 days out.  -Ted Rood, Senior Originator


Today's Most Prevalent Rates

  • 30YR FIXED - 3.5 - 3.625%
  • FHA/VA - 3.25-3.5%
  • 15 YEAR FIXED - 3.125 - 3.375% 
  • 5 YEAR ARMS -  3.375-3.75% 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

  • 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.
30 Year Fixed Rate Mortgage
15 Year Fixed Rate Mortgage
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Today's Rates
Best Execution
Rate Change
30 Yr FRM 3.58% -0.02
15 Yr FRM 3.25% -0.05
FHA 30 Year Fixed 3.25% -0.10
Jumbo 30 Year Fixed 3.69% -0.02
5/1 Yr ARM 3.40% -0.02
Average Mortgage Rates
Rate Points Change
FHFA *
15 Yr. Fixed 3.79% 1.21 -0.12
30 Yr. Fixed 4.39% 1.12 -0.22
MBA **
30 Yr. Fixed 4.12% 0.38 +0.08
15 Yr. Fixed 3.48% 0.32 +0.06
30 Yr. Jumbo 4.07% 0.21 +0.04
30 Yr. FHA 4.01% 0.28 +0.04
5/1 ARM 3.58% 0.27 +0.02
Freddie Mac **
30 Yr. Fixed 3.60% 0.50 +0.00
15 Yr. Fixed 3.07% 0.50 +0.02
1 Yr. ARM 2.68% 0.20 +0.01
5/1 Yr. ARM 3.35% 0.30 -0.01
* FHFA averages are updated monthly.
** Mortgage Bankers Association (each Wednesday) and Freddie Mac (each Thursday) averages are updated weekly.
Secondary Markets
MBS
Price Change
30YR FNMA 3.0 101.78 -0.17
30YR FNMA 3.5 102.69 -0.13
30YR GNMA 3.0 102.84 -0.28
30YR GNMA 3.5 103.84 -0.09
15YR FNMA 3.0 102.47 +0.03
15YR FNMA 2.5 101.42 +0.03
Treasuries
Yield Change
2 YR 1.4865% +0.0131
5 YR 1.4234% +0.0270
10 YR 1.5623% +0.0606
30 YR 2.0443% +0.0900
Prices as of: 8/16/2019 5:06PM EST
MBS and Treasury data provided by Thomson Reuters.
Mortgage News Daily and MBS Live! are exclusive re-distributors of Real Time Thomson Reuters Mortgage Information.
Secondary Marketing Managers:
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About This Report
Mortgage News Daily is a trusted source of mortgage rate market data and analysis, with over 1 million readers each month. Unlike many rate surveys, our survey is conducted on a daily basis and is designed to bring you the most current and accurate rate data available.  We use a proprietary formula to calculate averages based on best-execution rates from top lender's rate sheets, also taking into account feedback from hundreds of mortgage market professionals around the country.