January 4, 2019
Mortgage rates hit the lowest levels in nearly a year as of yesterday afternoon. In general, they've had a one track mind for the better part of two months. Today brought the first real challenge to the recent trend. In plain terms, yesterday brought us the biggest single day drop in mortgage rates of this cycle and today completely erased it.
As the headline suggests, today's jobs report had quite a lot to do with the bounce. Strong economic data is generally an enemy to low interest rates, but the impacts vary widely depending on the report. The jobs report is universally considered to be the most important of the monthly economic data. This one in particular was likely to be scrutinized due to recent policy comments from the Fed. It ended up being one of the strongest examples in more than a decade, thus providing a clear signal for rates to move higher.
In the bigger picture, today's bounce presents a threat to the entire trend of the past few months. Again, that trend had been exceptionally strong--so strong that investors have been looking for a sign of a correction. From here, it remains to be seen how much higher rates need to go before markets feel like they've seen a sufficient correction, but it would be a pleasant and unlikely surprise if it was a one day affair. Translation: there's a very real risk that rates could move higher before they move lower.
Loan Originator Perspective
A robust December jobs report ignited a stock market rally and bond market selloff today, negating yesterday's gains. My crystal ball is broken, so hard to say if this is the end of dropping rates or just a momentary pause. I'm locking loans closing within 45 days. -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.