April 12, 2019
Mortgage rates rose fairly quickly on Friday, depending on the lender and the scenario. Bonds (which dictate mortgage rates and interest rates in general) weakened overnight on a variety of foreign and domestic data. While we can't necessarily be sure that one particular development was more responsible for the move than another, we can observe that most of the damage followed news of surprisingly strong credit growth in China. This could stand to reason given that China and Europe are central to the cautionary economic stance taken by the likes of the Fed.
In general, uncertainty about the global economy would be associated with lower interest rates. Actually a downbeat economy is even better than an uncertain one! With Chinese GDP and several European metrics hitting long term lows in the past few months, recently low interest rates made good enough sense. But if Chinese loan growth is exploding, it's akin to someone saying "not so fast" to the downbeat outlook and low rate environment. That said, this is just one piece of data and it would require actual economic output to confirm the fears expressed by today's rate spike.
Loan Originator Perspective
Bonds backed up today, as treasury yields rose to 2.56% and MBS sold off about 25 bps. We're solidly at the top of recent ranges, and hoping to bounce lower from here. Sadly, there's no guarantee of that, so I have to play defense here. I'm locking applications closing within 45 days. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.25%
- FHA/VA - 4.0%
- 15 YEAR FIXED - 3.875-4.00%
- 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.