December 14, 2018
Mortgage rates didn't move much today, and that's arguably a good thing. When the week began, we discussed the need for rates to cool-off after last week's rapid drop. Doing so would improve our chances of seeing recently lower rates stick around for more than a fleeting moment. Now here we are on Friday with the average lender not too far from last Friday's 3-month lows.
Each passing day this week saw underlying market activity die down as investors circled the metaphorical wagons ahead of next week's big Fed announcement. Much of the recent improvement in rates has come courtesy of the market's read on the Fed. They're expected to be more "dovish" (i.e. more friendly in terms of monetary policy and rate hikes, ostensibly in response a growing case for economic deceleration).
While various speeches from members of the Fed may suggest that dovishness, it would be another matter for their official communications to confirm it. Moreover, financial markets are already trading as if some of that confirmation is in place. That increases the risk that an unfriendly Fed (or even merely a neutral Fed) could cause a bit of a bad reaction that sends rates higher. As such, it makes more sense to be cautious in terms of locking/floating at the moment, or at the very least to have a solid game-plan in place with your loan originator for next week's Fed day (Wednesday).
Loan Originator Perspective
Bonds stayed locked-in, and rates have scarcely budged since Wednesday. I'm still locking loans closing within 30 days, think a dovish Fed stance is already priced in. If Fed anticipates more inflation, rates will jump back up quickly. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.75%
- FHA/VA - 4.25%
- 15 YEAR FIXED - 4.25%
- 5 YEAR ARMS - 4.375%-4.875% depending on the lender
Ongoing Lock/Float Considerations
- Headwinds that had plagued rates for most of the past 2 years are slowly dying down. The rising rate environment could flare up again, and some headwinds remain in effect, but the broader tone has taken a more optimistic shift.
- Highest rates in more than 7 years in Oct/Nov. Lowest rates in more than 2 months as of early December
- This is a bit of a crossroads. We may look back at Oct/Nov and see a long-term ceiling, or we may look back at early December and see a temporary correction before more pain. Either way, it's one of the more hopeful positions we've been in for several years.
- 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.