July 12, 2019
Mortgage rates moved decisively higher this week as the underlying bond market finally began shifting gears. After the Fed meeting in June, rates moved to the lowest levels in more than 2 years and had been holding in a narrow range since then. The risks of a breakout were set to increase as the market digested several key events. One of the most important of those events was this week's congressional testimony by Fed Chair Powell.
Interestingly enough, Powell's testimony actually helped rates at first. In the 2nd part of the testimony yesterday, there wasn't much of a market reaction. Instead, it was stronger economic data and poorly received Treasury auction that pummeled the bond market. As bonds weaken, rates rise.
Not all lenders fully adjusted their rate sheets to reflect yesterday's market movement. That means many lenders offered even higher rates on Friday despite the fact that the underlying bond market actually improved somewhat. That leaves today's rates at the highest levels since before the Fed meeting on June 19th.
Loan Originator Perspective
Bond markets recovered a good portion of yesterday's pronounced losses, but we're far from out of the danger zone here. Market sentiment has gone from bond-friendly to (at least) bond-neutral. It's going to take a LOT to spur rates lower, and not much motivation for them to rise. I'm locking loans closing within 45 days. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.00%
- FHA/VA - 3.625%
- 15 YEAR FIXED - 3.5-3.625%
- 5 YEAR ARMS - 3.375-3.75% 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.