June 18, 2019
Mortgage rates have generally been moving sideways for the past 2 weeks. This has accomplished a twofold goal of coming to terms with the strong gains seen in May as well as preparing for tomorrow's hotly-anticipated announcement from the Fed. It has been and continues to be the case that any major surprises (or even minor surprises) from the Fed could have big, immediate effects on rates for better or worse. But just as the sideways momentum was about to lull us to sleep this week, central bank news from across the Atlantic stepped up to change the field of play today.
European Central Bank (ECB) President Mario Draghi delivered a speech this morning in which he laid out the likelihood of additional stimulus measures including rate cuts deeper into negative territory. European bond markets surged and US bond markets (which dictate interest rates) surged nearly as much. Mortgage lenders have done a fairly good job of adjusting to the changes in the market with the average lender very close to the long-term lows seen 2 weeks ago.
Loan Originator Perspective
Bonds caught a bit of an unexpected boost today, as ECB Chairman Draghi mentioned potential fiscal stimulus. We're back to the low end of our recent range, with rates still trending lower. I'm locking loans closing within 30 days, but floating most with more lead time. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 3.875%
- FHA/VA - 3.5-3.75%
- 15 YEAR FIXED - 3.75%
- 5 YEAR ARMS - 3.625-4.125% 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.