December 10, 2019
Mortgage rates moved up modestly today as bond markets weakened in response to trade headlines. This week's key consideration on the trade front is whether or not the planned December 15th tariff increase is delayed, canceled, or confirmed. In general, a delay or cancelation would be bad for rates, but markets are already expecting a delay to some extent. The bigger deal would be waking up Monday morning of next week to find the tariff hike had been implemented. In that case, rates would likely benefit (i.e. move lower!).
Between now and then, we are most likely to see moderate volatility in a fairly narrow range. Several optimistic trade headlines put upward pressure on rates today, but not enough to push them outside their recent range.
Tomorrow brings a policy announcement from the Fed. This is typically a big flashpoint for rates, but its importance is somewhat muted for a few reasons. First off, the trade war narrative dominates the news cycle currently--at least as far as rates are concerned (because rates don't care about the impeachment proceedings or the USMCA news). Beyond that, the Fed is not expected to hike or cut rates tomorrow, so there's not much they can do to rock the boat of market expectations.
Loan Originator Perspectives
Bonds coasted Tuesday, posting slight losses by mid PM action. With a tariff deadline fast approaching, I anticipate yet another token agreement, kicking the can down the road a few months. I'm locking new applications closing within 45 days for most clients. -Ted Rood, Senior Originator
Today's Most Prevalent Rates For Top Tier Scenarios
- 30YR FIXED -3.75 - 3.875%
- 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.