August 22, 2018
Mortgage rates haven't really moved for 9 straight business days. Some lenders have seen microscopic improvements during that time, but the average lender is still quoting the same rates and fees seen on August 13th.
The underlying bond market is part of the problem. Bonds--which dictate rates--haven't been too interested in responding to conventional inputs. The bonds that underlie mortgages are especially guilty (compared to, say, US Treasuries which are more willing to respond to news and events at the moment).
That doesn't mean nothing can happen that would have an effect, simply that the stuff that has happened hasn't been enough to move the needle. When market participants return in full force in mid-September, this seasonal pattern typically changes. It could even happen sooner, but until then, it's keeping the risk/reward spectrum very muted for those considering locking vs floating.
Loan Originator Perspective
Treasury yields bottomed out at 2.82%, this summer's previous rate floor, today. While there's no shortage of DC Drama, it remains to be seen whether it'll translate to bond demand/lower rates. I'm locking applications closing within 30 days, cautiously floating some with longer until closing. -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 moved higher in a serious way due to several big-picture headwinds, including: the Fed's rate hike outlook (and general policy tightening), 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.
- Despite those headwinds, the upward momentum in rates has cooled off heading into the summer months. This could merely be the eye of the storm, or it could end up being the moment where markets began to doubt that prevailing trends would continue.
- It makes sense to remain defensive (i.e. generally more lock-biased) because the headwinds mentioned above won't die down quickly. Temporary corrections can be explained away, but it will take a big change in economic fundamentals or geopolitical risk for the big picture to change. While that doesn't necessarily mean rates have to skyrocket, there's a good chance it means rates will struggle to move much lower than early 2018 lows until more convincing motivation shows up.
- 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.