January 10, 2019
Mortgage rates were unchanged again today, despite moderate weakness in underlying bond markets. Bonds are the primary ingredient used in determining mortgage rates, but the timing of market movement and lender preferences can result in discrepancies between the two. For instance, if market weakness happens late enough in the trading day, many mortgage lenders will wait until the following day to do anything about it in terms of updating their rate sheet offerings. Additionally, the bonds that dictate mortgage rates can trade slightly better or worse than the mainstream bond market (essentially, US Treasuries).
Both of the those factors are in play today. Treasuries weakened more noticeably than mortgage-backed bonds, primarily because Treasuries had strengthened at a faster pace last week. In other words, mortgage bonds have been holding steadier while Treasuries have been more volatile. On top of that, the most prominent weakness was right at the end of the trading day. If bonds don't move much overnight, the average lender would likely be offering slightly higher rates tomorrow morning.
In the bigger picture, rates have been sideways for the past 3 days after bouncing up a bit from the lowest levels since early 2018. If rates are able to avoid undergoing a very big correction, it would bode well for longer term improvement potential, but I'd emphasize that such a thing could be a waiting game. It's also not without its risks. Even if traders are feeling pretty optimistic about rates right now, an end to the government shutdown combined with strong economic data could make for a quick jump to higher rates.
Loan Originator Perspective
Bonds snored through a sedate day Wednesday, and rates were largely unchanged. Tomorrow holds some key inflation data, but it'll take a big surprise in either direction to alter rates' outlook. We're holding for now, and I'm locking applications closing within 30 days. -Ted Rood, Senior Originator
I and my clients continue to feel not much benefit in floating. The trend seems to be turning back against us, so i would recommend locking in now. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.5%
- FHA/VA - 4.25%
- 15 YEAR FIXED - 4.125%
- 5 YEAR ARMS - 4.25%-4.625% 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 8 months by the end of the year.
- 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.