February 5, 2019
Mortgage rates stabilized today, after moving higher somewhat quickly following several strong economic reports on Friday. If you'd like to revisit the relationship between economic data and rates, we discussed it in greater detail in yesterday's coverage.
Interestingly enough, today brought the week's most important economic report--ISM Non-Manufacturing. This is the counterpart to the ISM Manufacturing report that caused problems for rates on Friday. Today's non-manufacturing version came in weaker than expected, so from an economic data standpoint, it's no surprise to see rates improving.
Notably, rates were set to improve, somewhat, even before the ISM data came out. That suggests the broader bond market (which underlies mortgage rate momentum) is settling into a "wait and see" stance from which it can digest all the incoming economic data that it missed during the government shutdown. By mid-March, traders will be fully caught up on the data and will also get another major update from the Federal Reserve. As such, that would be the time frame where we'd expect to see rates making bigger moves in the bigger picture.
Loan Originator Perspective
Bonds posted small gains today, as the shock of Friday's blowout jobs report began to fade. My pricing improved ever so slightly over Monday's. I'm still locking loans closing within 30 days, don't see a huge upside to justify floating here. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 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.