November 1, 2019
Mortgage rates held steady today after moving sharply lower yesterday. "Sharply," in this context, means that many lenders saw rates move lower by as much as an eighth of a percentage point versus the previous morning. Changes of that magnitude are rarely seen in the space of 24-48 hours. In fact, more often than not, entire weeks go by with a 0.125% change in average 30yr fixed rates.
The size and speed of the move is interesting in and of itself, but it's made more interesting by the fact that this week's most prevalent mortgage rate headlines claimed that rates were actually HIGHER. Rest assured, that's not the case. So what's with the misleading headlines?
This is actually a fairly common occurrence. It stems from the fact that the industry's longest-standing and most widely-cited mortgage rate barometer--Freddie Mac's weekly rate survey--is only updated once per week. Moreover, Freddie's weekly rate is announced on Thursday morning whereas the data is primarily collected on Monday and Tuesday. The last 2 days of the week aren't even counted.
All of the above means that any significant movement in rates in the 2nd half of any given week can create a big discrepancy between Freddie's numbers and reality. The differences are only more pronounced if rates were moving in the opposite direction heading into the first part of the week, which is exactly what happened this time around.
In other words, Monday--the day that gets the most weight in Freddie's survey--saw the highest rates of the current week. They didn't fall much on Tuesday or Wednesday, which is the last possible opportunity for rate quotes to make it into the survey. As such, the survey logically conveyed "higher mortgage rates this week" just in time for lenders' actual rate sheets to improve at their fastest pace since March 22nd, 2019.
Loan Originator Perspective
Today's jobs report surpassed expectations, but bonds retained most of yesterday's gains. The drama over US/China tariffs MAY be easing, which won't help rates. I am locking loans closing within 45 days for most clients. -Ted Rood, Senior Originator
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.