October 18, 2019
Mortgage rates were flat today. In fact, they were very close to being flat on the week for that matter! This is a reflection of the bond markets current set of concerns, which really came into focus late last week with Thursday's Brexit-related news and Friday's trade deal updates.
Brexit refers to the UK's attempts to exit the EU. As esoteric of a concern as that may seem, it's something that the bond market (and hence, interest rates) quite clearly cares about. Last Thursday's unexpected progress between Boris Johnson and Northern Ireland's Prime Minister sent rates screaming higher at their fastest pace in months. I could also argue that much of the damage that seemed to have been done by Friday's US/China trade news was instead follow-through momentum from Thursday's Brexit-inspired move.
Why did that meeting matter so much? If Northern Ireland and the UK agree on how to do Brexit, the UK gets a "deal" when it breaks from the EU. The deal would hopefully make things easier on all parties involved and preserve as much of the economic benefit of the existing trade/commerce relationship as possible. A stronger global economy is bad for interest rates. It's that simple. Rates would have continued higher this week if it looked like the newly drafted Brexit deal could garner enough votes to be approved by British parliament, but reports were quick to suggest that's a long shot.
Either way, we'll find out how the UK votes tomorrow and we'll see what the fallout is for mortgage rates on Monday. It may well be the case that the whole process is delayed for another 2 months and we'll get to open this present again during the holiday season.
Loan Originator Perspective
Bond markets coasted through Friday, posting minimal gains and remaining near their levels since Tuesday afternoon. Saturday may bring Brexit clarification, which could certainly impact next week's pricing. I'm still locking my November closings early in the process. -Ted Rood, Senior Originator
Locking or floating over this weekend should be based on what you feel the outcome of the UK vote on the Brexit deal. If UK is unable to pass the deal through their house, then i think rates will react positively Monday morning which makes floating a good call. If UK passes the Brexit deal, rates will come under pressure which means locking today is the safe call. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED -3.75%
- FHA/VA - 3.375%
- 15 YEAR FIXED - 3.375%
- 5 YEAR ARMS - 3.25-3.75% depending on the lender
Ongoing Lock/Float Considerations
- 2019 has been the best year for mortgage rates since 2011. Big, long-lasting improvements such as this one are increasingly susceptible to bounces/corrections
- Fed policy and the US/China trade war have been key players. Major updates on either front could cause a volatile reaction in rates
- The Fed and the bond market (which dictates rates) will be watching economic data closely, both at home and abroad, as well as trade war updates. The stronger the data and trade relations, the more rates could rise, while weaker data and trade wars will lead to new long-term lows.
- 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.