October 30, 2018
Mortgage rates were moderately higher today as underlying bond markets continued backing away from their strongest levels in more than 3 weeks (stronger bonds = lower rates). In general, bonds' strength had come at the expense of the stock market, but it was taking more and more drama in stocks to net the same amount of benefit for bonds.
For example, even though the S&P was lower yesterday than it was last Friday, bonds weren't able to make it back to last Friday's levels--something they would have easily done if they were keeping a consistent pace with stock losses. With stocks improving modestly today, bonds were logically weaker. To be fair, this relationship won't always set the tone for bonds, but it has been the biggest consideration this month.
The remainder of the week brings several calendar events that could have an impact on both sides of the market. Long story short, rates are at risk of bouncing higher more noticeably unless they get some serious help. That help would either need to come from surprisingly weak economic data, an even bigger downturn in stocks, or an unexpected headline that implies big economic risks.
Loan Originator Perspective
Bonds hovered near unchanged today, as Wed-Friday's employment and inflation data looms. We're not seeing robust "month end" bond demand, as we sometimes do, which would have been nice. I'm playing defense for now, locking new applications closing within 30 days. It's going to take dramatic data to quell the rising rate trend, and I don't see that happening soon. -Ted Rood, Senior Originator
I still recommend locking. Rates need a reason to drop, and there aren’t any reasons at this time. -Timothy Baron Licensed Loan Originator, NMLS #184671
Today's Most Prevalent Rates
- 30YR FIXED - 4.875-5.0%
- FHA/VA - 4.5%
- 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.