July 2, 2019
Mortgage rates moved down today by varying amounts depending on the lender. In some cases, lenders weren't offering much of an improvement over yesterday. Those lenders are more likely to improve tomorrow, or at least we can say they'll be starting with an advantage. Other lenders made use of their advantage today.
The advantage in question came courtesy of a strong performance in the bond market today. When bonds improve enough, lenders are increasingly likely to re-price their rate sheet offerings for the better. This rarely affects the interest rate itself, but it can reduce closing costs by an eighth of a percentage point on average.
There were no significant economic reports out today. The bond market is eagerly anticipating tomorrow's reports ahead of the Independence Day market closure. Then on Friday, the most important economic report of any given month--the jobs report--stands as the biggest potential guidance giver in the near term. If the data is much weaker than expected, rates could continue to fall. If it's much stronger, they could rise somewhat abruptly. Either way, markets are expecting more volatility ahead and today was their way of leading-off in a rate-friendly direction. In other words, rates are signaling their willingness to fall further in the event of downbeat data.
Loan Originator Perspective
Bond markets rallied Tuesday, despite no motivation from economic data, and some "let's not get ahead of ourselves on rate cuts" Fed rhetoric. Concerns over continued China tariffs and some unspecified DC drama may have sparked the rally. At any rate, we're at the bottom of recent ranges. If you're locking today, be sure to wait until later in the day to ensure your lender passed along the day's gains. -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.