December 3, 2019
Mortgage rates were up to the highest levels in 2 weeks yesterday, but that was then and this is now. In the wee hours of the morning, trade-related headlines rocked financial markets. This sent stock prices and bond yields (aka "rates") lower at a rapid pace. Mortgage lenders began the day in much better territory. By the middle of the day, they'd seen enough improvement to reissue rate sheets with even better terms. The average lender is now close to the lowest rates since October 9th.
Interest rates are in an interesting spot right now. They're willing (and compelled) to pay attention to headlines like those seen today, as well as the economic data that typically provides guidance. The data adheres to a schedule whereas the headlines usually don't. With that in mind, there's no way to say that today's market motivations will continue putting downward pressure on rates in the days ahead. We do, however, have important economic data in the morning. It still has the ability to push rates in either direction depending on the results (just like it did at the beginning of the week). The only difference is that low rates will get a bit of a head start thanks to today's improvement.
Loan Originator Perspective
Bonds rallied and stocks swooned today, as more tariff trauma surfaced, both with China and elsewhere. Tariffs reduce economic growth, which makes investments like MBS more attractive. I'm not locking new loans for now, as today's rates don't reflect our full gains, but will be looking at pricing on January closings tomorrow. At any rate, this is likely more than a one day rally. - Ted Rood, Senior Originator
Trade war news helps bonds rally. The rate sheets i have seen do not reflect these gains so floating overnight seems like a good call. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates For Top Tier Scenarios
- 30YR FIXED -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.