March 26, 2019
Mortgage rates took the day to do just a little bit more of what they've been doing in fairly grand fashion for the past week: MOVE LOWER! When the good times started in earnest (after last week's Fed Announcement), rates were already in line with their lowest levels in more than a year. As of today, they're another quarter or a percentage point (0.25%) lower. In other words, if you'd been looking at a quote of 4.375% last Tuesday, you'd likely be seeing 4.125% today.
Whether or not that's the conventional 30yr fixed quote you're seeing depends on a variety of factors. But certainly, for anyone with more than 20% equity and strong credit/income, 4.125% is a given and 4.0% is increasingly available.
Seeing 4.0% means that a few of the most aggressive lenders are going to be offering 3.875% on truly perfect scenarios, but such quotes aren't widespread enough to consider as being anywhere near "the going rate." And while that certainly means "the high 3's" are in sight for mortgage rates, don't expect that move to happen nearly as quickly as the move down to 4.125%. The reason is complicated to explain and understand, but it has to do with the structure of the underlying market for mortgage-backed bonds, and a sort of arbitrage-based advantage that currently exists between 4.25% and 4.125%.
To make a long story short, it doesn't cost the average lender any more to give you 4.125% today compared to 4.25%. This is an uncommon imbalance, and it definitely doesn't apply to the next few steps lower (4.0 or 3.875%).
Loan Originator Perspective
Bond markets hovered near unchanged today, which was hardly a surprise given last week's robust rally. MBS remain at their best levels since Jan 2018. I'm locking loans closing within 30 days, still going by clients' risk tolerance for those closing further out. If there is a trend, it's still our friend. -Ted Rood, Senior Originator
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.