December 4, 2019
Mortgage rates dropped sharply yesterday after having risen to the highest levels in 2 weeks the day before. Yesterday's culprit was trade war related, but today had a more robust calendar of potentially market moving data.
So did the data end up moving the market? If the title didn't give it away, let's make it clear: no! This market is at the whim of trade-related headlines first and foremost. In today's example a news story simply pushed back on the conclusions implied by yesterday's trade-related headlines. Specifically, yesterday's news left markets with the impression that a US/China trade deal could be delayed for more than a year while today's headlines said 'nah, it's not that bad, and in fact, it's actually pretty good.'
With that, the underlying bond market lost ground, thus pushing bond prices lower and bond yields higher. Yield is another word for rate. The bonds that underlie mortgages tend to move in the same direction as the overall US bond market, but at a slightly slower pace. That meant they improved less than Treasuries yesterday and were slower to move toward higher rates today. But rates still moved higher!
The good news is that, in relative terms, rates are only higher compared to yesterday. Disregarding yesterday, you'd have to go back several weeks to see anything better.
Loan Originator Perspective
Yesterday's bond market gains vanished, as rumors of potential tariff resolution usurped tepid economic data. We're still at better levels than Monday, so some consolation there. I am locking most loans closing within 45 days. - Ted Rood, Senior Originator
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.