September 17, 2018
Mortgage rates may have had a fairly bad day last Friday, but today was worse. Today officially saw the average lender back at rates not seen since May 17th, 2018. That date might not seem too far away, but at the time, it marked the highest rates since late April of 2011. In other words, today's rates matched 7-year highs.
If there's a saving grace, it's the fact that underlying bond markets were able to improve throughout the day without most mortgage lenders adjusting rate sheets accordingly. In other words, if bonds are in the same territory by tomorrow morning, the average lender would be offering slightly lower rates.
The other potential saving grace is that rates have had a bad enough moving streak that they're increasingly likely to catch a break simply due to the normal cadence of bond market momentum. That's another way of saying that things have been bad enough for long enough that we're due for at least a shallow rebound. How shallow? Frankly, it could be so shallow that the average mortgage-seeker might not notice much of a difference in loan quotes. We may be waiting for next week's Fed announcement before seeing the next big move.
Loan Originator Perspective
Bonds took a little breather today from the upward trend. I am still suggesting locking at origination until further notice or signs of any meaningful improvement. -Al Hensling
Today's Most Prevalent Rates
- 30YR FIXED - 4.75
- FHA/VA - 4.5%
- 15 YEAR FIXED - 4.25%
- 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.
- Rates cooled off heading in the summer months, but that proved to be the eye of an ongoing storm. As long as economic data remains strong, rates can continue to move higher in general, even though there may be brief periods of correction.
- It makes sense to remain defensive (i.e. generally more lock-biased) because the headwinds mentioned above won't die down quickly. It will take a big change in economic fundamentals or geopolitical risk for the big picture to change.
- 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.