November 6, 2018
Mortgage rates didn't move much today. A few lenders were microscopically stronger or weaker, and the average lender was perfectly unchanged. That's fairly decent news, considering underlying bond markets suggested higher rates by the end of the day. That said, this could easily be one of those situations where lenders are heading into tomorrow morning with a bit if an upward adjustment to make to rates (reason being: they need to see a certain amount of movement in any given day before "repricing." Otherwise, they'll just wait for the following morning).
Even then, the landscape of tomorrow morning's bond market could look very different. Some market participants don't think midterm election results will matter much at all. Others think they could be the jumping-off point for the next phase of market movement in both stocks and bonds. The volatility potential wouldn't be worth stressing out about were it not for the fact that rates are already being pushed up against a long term ceiling. When that happens, and when anything comes along to push rates just a little bit higher, there can be additional momentum as the important psychological ceiling is broken. The bright side is that strength in bonds tomorrow would add evidence to the case for recent highs being a ceiling for the time being.
Loan Originator Perspective
Bonds hovered in a tight range today, as investors eyed election possibilities and a bond auction was well received. While we're still near the highest rates in a month, at least (for the moment), it appears rates aren't inclined to rise much further. I'm inclined to lock loans closing within 30 days, but wouldn't object if a client closing farther than 30 days out wanted to float cautiously. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 5.0%
- FHA/VA - 4.5%-4.75%
- 15 YEAR FIXED - 4.5%-4.625%
- 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.