January 2, 2019
Mortgage rates didn't have much to celebrate in 2018--at least not until the last few months. But those last few months were quite nice! Despite uncertainty heading into the new year, rates managed to drop again to kick things off--effectively keeping the New Year's party going.
The average lender is now down to the lowest rates since early 2018. For some, that means April. For others, it means February. Either way, it's meaningfully lower compared to the recent highs. For example, lenders are quoting rates that are roughly half a percentage point lower compared to early November. On top of this, mortgages had been underperforming other interest rates so much in 2018 that there may be a correction to that trend (i.e. mortgages were so badly shunned by investors compared to Treasuries that they could experience a resurgence in relative demand).
Despite the strong start to the new year, there are still risks on the horizon. If economic data is exceptionally strong in the coming days, or if stocks find a reason to surge significantly higher, the party might be over for the time being.
Loan Originator Perspective
I'm still locking loans closing in January, floating those further out. Friday's employment report (and continuing DC Drama) may determine whether rates keep dropping or not. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.625%
- 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.