December 13, 2019
Mortgage rates were somewhat distressed, to say the least, after yesterday's various news stories pertaining to the US/China trade deal. For a variety of reasons, that's the biggest consideration for financial markets at the moment, and interest rates are no exception. Rates were pushed to the upper edge of their recent range as the signing of the first phase of the trade deal looked increasingly likely by the end of the week.
While both sides basically acknowledged the progress on the deal (and even the probability that it will be signed), it was not, in fact, actually signed. Additionally, several details still need to be cleared up before that happens.
The absence of a more concrete trade deal conclusion proved beneficial for rates. As far as underlying bond markets are concerned, much of yesterday's damage was undone. Mortgage lenders would likely need one more day with bonds holding current levels before getting their rate sheet offerings back to Wednesday's levels, but they got fairly close by the end of business today.
Loan Originator Perspectives
As I expected, today's tariff announcement fell short of being an actual agreement, and bond markets regained much of yesterday's snowball losses. Looks like rate sheets don't reflect all our gains, I will wait until end of day (or next week) before I lock any new loans. -Ted Rood, Senior Originator
Today's Most Prevalent Rates For Top Tier Scenarios
- 30YR FIXED - 3.875%
- FHA/VA - 3.375% - 3.5%
- 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.