November 30, 2018
Mortgage rates may have ebbed slightly higher today, but that only erased a fraction of the improvement seen over the past 2 days. Combined with the even stronger showing 2 weeks ago, this makes November the best month of 2018 in terms of mortgage rate improvement.
All of the good times come with a price, however, as the first few days of the month saw rates move to their highest levels in more than 7 years. Nonetheless, anyone in the market to buy or refi has seen a meaningful improvement over the past 3 weeks.
How meaningful is meaningful? Assuming a loan amount of $300,000, the average mortgage payment (30yr fixed, conventional) would be $45/mo lower this week vs last week, and $90/mo lower vs the beginning of the month. In terms of upfront costs (i.e. if you were paying points to keep your rate low), you'd be saving $1500 cash today compared to last week, and $3000 compared to the beginning of the month. Not bad!
If December is able to keep these good times rolling, it will depend on the economic data set to release next week--especially the important jobs report on Friday.
Loan Originator Perspective
Bonds retained the week's gains today, despite inflation data that exceeded expectations. Early November's rate spike is fading, and it appears we've weathered 2018's highest rates. I'm still locking most loans, but wouldn't disagree with a risk-tolerant client who wanted to cautiously float. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.875%
- FHA/VA - 4.375%-4.5%
- 15 YEAR FIXED - 4.375%
- 5 YEAR ARMS - 4.375%-4.875% 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.