October 9, 2019
Mortgage rates moved modestly higher today, but remain very close to the lowest levels in nearly a month. The underlying bond market (which dictates rates) has been somewhat volatile this week on a combination of trade-related headlines and comments from Fed Chair Powell. Traders also have an eye on recent market trends in conjunction with this week's bond market auctions.
All of the above have added up to plenty of back and forth movement, but no sustained trend in one direction or the other. Even then, we're not talking about huge swings for the average mortgage lender. Most prospective borrowers would barely see a detectable difference from one day to the next. Eventually, that will start to change when the next bout of momentum sets in.
As for the reason that mortgage rates haven't felt too many ill effects from bond market volatility? It has to do with the difference between US Treasuries (the "vanilla" of the US bond market) and the bonds that are specific to the mortgage market (MBS or 'mortgage-backed securities'). Long story short, MBS haven't been able to improve nearly as quickly as Treasuries as rates have fallen over the past 2 months, but the saving grace is that MBS don't tend to lose ground as quickly when Treasuries are having a bad day. Today was one of those days!
Loan Originator Perspective
Bonds continue yesterday's small regression, as Fed Minutes and Tariff Talks weighed on traders' minds. Tomorrow brings CPI data, which carries more weight than most econ data. I am still locking applications closing within 45 days, for all but the most risk-craving clients. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED -3.625%
- 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 and as of September, it looks like such a correction is underway
- 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.