July 9, 2018
Mortgage rates were modestly higher today amid exceptionally quiet market conditions. In general, the bond market (which underlies mortgage rates) has been sideways and fairly lifeless since the end of June. Until Friday, the same could be said for stocks. At that time, both sides of the market were waiting to see how other investors would react to the official implementation of new tariffs.
Volatility surrounding the tariff launch suggests that the stock market was jumpier than bonds/rates. Still, rates have been willing to take some cues from the direction of movement in stocks. For instance, when stocks are surging higher, it can suggest investors are more comfortable with risk, and less eager to own bonds, which are considered a safe haven. When demand for bonds drops, rates rise.
All of the above having been said, I'd hesitate to read too much into the microscopic rate movement seen in recent weeks. Today, especially, was incredibly light in terms of volume and participation among bond traders. Themes may change when activity begins to ramp up.
Loan Originator Perspective
Bonds regressed slightly today, giving up Friday's gains. Keep in mind, we are talking about a narrow range here. With limited market motivation for further gains the next several days, I'm locking new applications closing in the next 30 days. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.625-4.75
- FHA/VA - 4.25-4.5%
- 15 YEAR FIXED - 4.125%
- 5 YEAR ARMS - 3.75-4.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates have been moving higher in a serious way due to headwinds that cannot be quickly defeated. These include the Fed's increasingly restrictive monetary policy outlook, the increased amount of Treasury issuance to pay for the tax bill (higher bond issuance = higher rates), and the possibility that fiscal stimulus results in higher growth/inflation.
- While we may see periodic corrections to the broader trend toward higher rates, it's safer to assume that broader trend can and will continue. Until that changes, it makes much more sense to remain heavily-biased toward locking as opposed to floating.
- 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.