December 4, 2018
Mortgage rates technically hit their lowest levels in exactly 2 months yesterday. Today merely takes them deeper into that territory. The size of the improvement is less impressive and less meaningful compared to that "lowest in more than 2 months" talking point. That said, taken in conjunction with the last 4 business days, the average lender is roughly an eighth of a percentage point lower. That comes out to $7/mo for every $100k financed (or $21/mo on a $300k loan).
On a somewhat frustrating note, mortgage rates didn't experience nearly as big of a move as the broader bond market. For instance, 10yr Treasuries--the most widely-used benchmark for longer-term interest rates) dropped 0.05% today. Mortgages only managed to drop by 0.02% in terms of effective rates.
The bigger improvement in Treasuries is a multifaceted issue, but was due in large part to big losses in stocks. Both sides of the market are closed tomorrow for a day of mourning in honor of the late George H.W. Bush. This results in a concentrated dose of economic data on Thursday and Friday. If it's weaker than expected, rates could easily continue lower, but if it surprises to the upside, the bounce back in rates could be somewhat abrupt.
Loan Originator Perspective
Bonds profited from stocks' swoon today, as treasury yields continued downward. MBS posted smaller gains, but at some point (soon?) should catch up with treasuries. Seeing gains like these, with no meaningful data today and NFP looming on Friday, is a bullish sign for bonds. I'm willing to cautiously float new applications, particularly those closing over 30 days out. -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
- 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.