March 25, 2019
Mortgage rates continued deeper into long-term lows today as the underlying bond market experiences its most impressive rally of the year. In a rally, bond prices are moving higher and rates are moving lower. This particular rally is bifurcated on several levels.
On one level, different maturities of US Treasuries are moving at very different paces. For instance, the 2yr Treasury dropped by .07% today while the 30yr Treasury fell by less than 0.01%. This has to do with investors betting on central banks keeping short-term interest rates low (or cutting them to even lower levels) among other things.
On another level, US Treasuries are moving at a very different pace compared to the bonds that underlie mortgages (mortgage-backed-securities or MBS). Part of last week's big news from the Fed spoke to the way it would be buying bonds in the future. In an oversimplified nutshell, that news greatly favored Treasuries. On top of that, when the overall bond market is moving as quickly as it is right now, Treasuries simply tend to do better than mortgages. The tradeoff is that mortgages will be a bit more insulated in the event rates bounce higher.
Loan Originator Perspective
The rally in bonds is continuing today. As of 2pm eastern, only a couple lenders have issued improved rate sheets. With bonds rallying with no direct cause, i think it would be wise to float overnight to see if this continues. If you do want to lock today and remove all risk, then wait as late as possible to allow lenders time to maybe reprice for the better. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.00-4.125
- FHA/VA - 3.875-4.00
- 15 YEAR FIXED - 3.875%
- 5 YEAR ARMS - 3.875-4.25% depending on the lender
Ongoing Lock/Float Considerations
- Early 2019 saw a rapid reevaluation of big-picture trends in rates and in markets in general
- The Federal Reserve has been a key player, and while they aren't the ones pulling the global economic strings, their response to the economy has helped rates fall more quickly than they otherwise might.
- Based on the Fed's laundry list of concerns, their current outlook for rate hikes and economic growth, and their bond-buying policy shifts, we've all but certainly seen the highest rates of this economic cycle in late 2018.
- 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.