April 5, 2018
Mortgage rates moved slightly higher today as trade war fears waned for financial markets. There's not a direct connection between trade issues and mortgage rates, but like any prominent financial news, there are usually only a few degrees of separation.
In the current case, stocks had moved quickly lower in recent weeks as the trade war potential increased. That weakness ultimately threatened to push stocks below early February's "crash" levels. Investors assumed that additional weakness would follow if that line in the sand is crossed. With that in mind, the bond market got in position to soak up some of the panic money fleeing from the stock market. When there is extra demand for bonds, bond prices rise and interest rates fall--all other things being equal. From there, the bonds that underlie mortgage rates are another degree removed, and then lenders' utilization of those bond prices in deriving a final rate sheet is yet another degree beyond that.
In other words, it takes a pretty big move near pretty important levels in stocks to get a rise out of the bond market. Today's increase in mortgage rates was relatively incidental in the bigger picture.
Tomorrow brings the important "Employment Situation"--the big jobs report that often acts as a jumping-off point for bigger trades (and thus bigger potential movement in rates).
Loan Originator Perspective
Lock anything closing in the next 30 days. Bumpy Trend in current environment -Al Hensling, Mortgage Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.5%
- FHA/VA - 4.375%
- 15 YEAR FIXED - 3.875%
- 5 YEAR ARMS - 3.5-3.75% depending on the lender
Ongoing Lock/Float Considerations
- 2017 had proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016.
- While rates remain low in absolute terms, they moved higher in a more threatening way heading into the beginning of 2018
- The scariest part of the move higher looks like it ended as of early February, and rates have been generally sideways since then
- Even so, the potential remains for more weakness (i.e. higher rates). It makes more sense to remain defensive (i.e. more inclined to lock) until we've seen a more convincing shift lower.
- 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.