October 15, 2018
Mortgage rates were sideways to slightly higher today, prolonging a 3-day trend of exceptionally light volatility. The 5 days before that (beginning on Wednesday, October 3rd) were completely different, with a huge move higher at first followed by a moderate recovery at the beginning of last week. That recovery largely followed the stock market weakness.
Stocks and rates don't always move in the same direction, but when stocks fall as quickly as they did last week, rates usually benefit. After such moves level-off, rates tend to wait for stocks to see if there will be an aftershock or a big bounce. For now, it doesn't look like stocks have made up their mind yet, as they too have continued in a largely sideways pattern during the last 3 trading sessions.
Loan Originator Perspective
Bond markets were essentially flat today, and my pricing mirrored Friday's. I still see no reason to float in this environment. While current rates may not be thrilling compared with last summer's, they sure might be compared with rates a month from now!-Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 5.0%
- FHA/VA - 4.5-4.75%
- 15 YEAR FIXED - 4.5%
- 5 YEAR ARMS - 4.25%-4.75% depending on the lender
Ongoing Lock/Float Considerations
- Rates continue coping with 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 (which certainly seems to be the case so far in 2018).
- While rates were able to recover and stay sideways in the summer months, September and October have seen a surge up to the highest levels in more than 7 years.
- Upward pressure can continue as long as economic growth and inflation continue running near long-term highs. Stay defensive (i.e. generally more lock-biased). It will take a big change in economic fundamentals or geopolitical risk for the big picture to change. Such things tend to not happen as quickly as we'd like.
- 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.