May 31, 2019
Mortgage rates were decisively lower today, following a massive market movement on news of new tariffs to be imposed on Mexico. In general, trade wars are economically negative. They hurt stocks and help bonds. When bonds are improving, it means bond prices are rising and yields (another word for "rates") are falling. Long-story short, investors are pricing-in a new reality where trade tensions do measurable damage to the global economy. This not only forces money out of stocks and into bonds, but it also implies lower inflation and increased odds of Fed rate cuts.
The specific implication for mortgage rates was quite good today. Mortgages have been lagging the moves seen in Treasury yields, for the most part. That was NOT the case today--at least for the lower portion of the rate spectrum. The average lender improved by the biggest amount of the past several weeks with top tier scenarios now easily seeing quotes of 3.875%. That said, different lenders have responded to the market movement at drastically different paces. Volatility tends to have that effect. If the bond market stabilizes at the beginning of next week, we'll see some more cohesive pricing between lenders.
Loan Originator Perspective
Bonds continue to add to yesterday's gains. Not a big fan of locking on Friday's and the rate sheets I have seen, seem to be holding back some of the gains. That said, I like floating over the weekend and re evaluate on Monday. If you have been floating, you should be seeing a lower rate, so nothing wrong with locking in the gains. - Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 3.875% - 4.0%
- FHA/VA - 3.75%
- 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 (and even their EXPECTED response) to the economy has helped rates fall more quickly than they otherwise might.
- Based on the Fed's laundry list of concerns, the bond market (which determines rates) will be watching economic data closely, both at home and abroad, as well as trade-related concerns. The stronger the data and trade relations, the more rates could rise, while weaker data and trade wars will lead to new long-term lows.
- 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.