December 28, 2018
Mortgage rates moved lower by an almost imperceptible amount today. The improvement was enough to bring the average lender to the lowest levels since the end of August, 2018. In other words, these are the best rates in 4 months.
2 months ago, all hope seemed lost. Rates were the highest in years and there were few reasons to expect the pain to subside, short of a massive meltdown in stocks or a big picture shift in the economy. As you're likely away, stocks indeed tanked heading into the 4th quarter. And as I've mentioned many times since, that stock weakness was largely responsible for rates' ability to reclaim lost ground.
This raises serious questions for the beginning of 2019 because the economic data and other indicators aren't necessarily looking like they justify all the pain we've seen in stocks. Granted, it's a cliche assertion in the financial media, but there is certainly a risk of a bounce back in January. With that in mind, to whatever extent stocks are able to bounce back, there could some upward pressure waiting for mortgage rates on the other side of the New Year. To be clear, this isn't a prediction--simply a reminder of the potential volatility ahead.
Loan Originator Perspective
Rates remained near their recent lows today, but treasury yields failed to break 2.73%, for the third time in 9 days. I'm locking loans closing within 30 days, and carefully floating February closings.
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.