December 20, 2018
Mortgage rates were steady to slightly higher today. As such, they remain quite close to their lowest levels in roughly 4 months--a distinction achieved yesterday following the Fed announcement and press conference.
Actually, it may be more fair to give credit to sharp losses in the stock market for yesterday's drop in rates. Today, however, another move lower in stocks failed to push rates any lower. In other words, the bond market (which dictates rate movement) seems to have found its floor as of yesterday afternoon. Rates weren't willing to break yesterday's best levels despite numerous attempts today--not to mention the stock market losses.
When we talk about "numerous attempts" or numerous iterations of any specific interest rate move during a single business day, we'll generally need to look at something like US Treasury yields. Mortgage rates don't move frequently enough to talk about numerous encounters with a specific level on an intraday basis. While all that may sound a bit confusing, it's pretty simple when you think about it like this: the general trajectory in mortgage rates tends to match the general trajectory of Treasury yields.
The convenient thing about this--at least for those that want to follow potential rate movements closely--is that it's easy to keep tabs on something like the 10yr Treasury yield throughout the day. If you did that today, you would have seen in bounce repeatedly at 2.75% before moving higher into the afternoon. You would have seen that move occur against the backdrop of falling stock prices (which have generally helped push rates in the other direction). And taking all of the above into account, you might have been a bit concerned about the implications for the near term rate trajectory.
Bottom line: it looks like rates may have found their next floor--at least for now.
Loan Originator Perspective
Bonds hovered near unchanged today, despite stocks' continued swoon. It'll likely take significant drama of some sort to change rates' current range. I'm locking loans closing in January, floating most closing further out. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.625-4.75%
- FHA/VA - 4.25%
- 15 YEAR FIXED - 4.125-4.25%
- 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 3 months as of mid 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.