October 31, 2019
Mortgage rates dropped like a rock today. This has absolutely nothing to do with yesterday's Fed rate cut, a little to do with the market reaction to the verbiage in yesterday's Fed announcement, and a lot to do with today's new developments. Chinese officials were cited as questioning the viability of the much-touted trade deal overnight. The trade deal is important to financial markets because it's thought to be an easy way to increase global economic growth--something that is typically bad for rates. As such, the questioning of the deal was good for rates.
On top of that, there was also an exceptionally weaker economic report out this morning--one that's often seen as a bit of an advance indicator of several other important reports coming out in the next 3 business days. The bond market continued to rally (i.e. yields moved lower) after that. Ultimately, mortgage lenders had seen enough to adjust rate sheets for the better. Combine that with the fact that many lenders didn't adjust yesterday's rate to reflect late day market improvement and the shift was massive.
Th average lender is at least an eighth of a percentage point lower than they were yesterday, and that's about as big as day over day changes get, outside of extreme cases.
Loan Originator Perspective
I definitely favor floating right now. Bonds have managed a decent rally over the last couple days. As is usual, when bonds rally, lenders tend to be slow to pass along the gains. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED -3.625-3.75%
- 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.