January 16, 2019
Mortgage rates rose modestly today after spending the past 2 days moving sideways. It was really yesterday's market weakness that caused today's move. Mortgage rates are most directly affected by the trading of mortgage-backed securities (MBS). When MBS are weaker, rates rise. MBS were weaker throughout the day yesterday, but not by quite enough for lenders to go to the trouble of revising their rate sheets for the worse. Instead, lenders simply waited until this morning to make the changes implied by the market. This delayed reaction is common when the market movement on any given day isn't quite enough to justify lender reprices.
In the bigger picture, rates have been in a holding pattern, possibly waiting for some indication that the government shutdown will end. When such a thing happens, it likely presents a negative risk for rates--at least in the short term. After that, it will take some time for the government's economic data to begin flowing again, and it will be that economic data that will ultimately have a bigger say with respect to interest rate momentum.
For now, rates remain in strong territory relative to the past 9 months. They've only been lower for a handful of days during that time, and not much lower!
Loan Originator Perspective
Bonds markets posted small selloffs today, and our pricing worsened slightly. It's seemingly going to take more drama (of one variety or another) for rates to rally further. I'm still locking loans closing within 30 days, going case by case on those closing between 31-60 days out. -Ted Rood, Senior Originator
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.