February 15, 2019
Mortgage rates were slightly higher today, marking the 6th day in a row where they've reversed course versus the previous day. This is the sort of behavior we see when underlying financial markets are having a hard time making up their mind (or are simply waiting for something before committing to the next big move).
In the case of mortgage rates, the underlying financial market is the bond market. There are specific bonds that most directly affect mortgage rates, but they are almost always moving in the same direction as other bonds anyway. That allows us to use something like the 10yr Treasury yield to keep an eye on interest rate momentum. There we see yields locked in an increasingly narrow range since the beginning of the year.
Movements inside that range aren't important to the bigger rate picture. When rates finally break out, the stakes will be higher. As to when that might be, mid-March is the current target, due to a few variables that won't become known until then. Of course, if the breakout happens sooner, you'll hear it here first. Between now and then, we can continue to track the smaller day to day moves occurring inside the narrow, sideways range. Today's happened to leave rates slightly higher, but if the last 6 days are any indication, they could easily bounce right back on Tuesday (markets are closed on Monday for Presidents Day).
Loan Originator Perspective
Bond markets retained yesterday's gains Friday, as the DC Shutdown Drama ebbed. Markets are closed Monday for Presidents' Day. With rates near February's lows, I'm locking applications closing within 30 days. -Ted Rood, Senior Originator
I have never been a fan of locking on a Friday ahead of a 3 day weekend, so i favor floating until Tuesday. Bonds were weaker this morning when rate sheets came out. Since that time, bonds have managed to regain much of the minimal losses. Doubtful we get a reprice better, so floating until Tuesday is worth the risk in my opinion. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.375 - 4.5%
- FHA/VA - 4.125 - 4.25%
- 15 YEAR FIXED - 4.0 - 4.125%
- 5 YEAR ARMS - 4.25 - 4.625% depending on the lender
Ongoing Lock/Float Considerations
- Headwinds that had plagued rates for most of the past 2 years began to die down in late 2018. A rapid decline in the stock market certainly helped drive investors into bonds (which helps rates) Highest rates in more than 7 years in Oct/Nov. 8-month lows by the end of the year
- This is a bit of a crossroads. The rising rate environment could flare up again. We may look back at Oct/Nov and see a long-term ceiling, or we may look back at early December and see a temporary correction before more pain.
- Either way, late 2018 was a sign that rates are willing to take opportunities presented to them. From here, it will be up to economic data, fiscal policies, and the stock market to decide on the next set of opportunities. The rougher the overall outlook, the better interest rates tend to do.
- 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.