July 24, 2019
Mortgage rates barely budged today, with the average lender offering almost the exact same terms as yesterday. That took some doing in the form of strength in the underlying bond market. As of yesterday afternoon, bonds were at their weakest levels of the day, thus implying today's rates would be higher unless overnight market movement was much friendlier. That's exactly what happened thanks to extremely weak economic data in Europe.
Economic weakness promotes strength in the bond market, which in turn pushes rates lower. Naturally, European data had the biggest benefit for European bonds, but there tends to be some spill-over between the world's biggest bond markets. In today's case, the benefit to the US bond market was big enough to erase yesterday afternoon's weakness, thus preventing rates from moving higher.
By comparison, today's trading session for bonds (during domestic hours) was much calmer than yesterday's. That could change tomorrow as the European Central Bank (ECB) releases a policy announcement before US markets open for the day. Like a Fed announcement, the ECB's decision on short-term rates and the verbiage it uses can have a significant impact on longer-term rates. While that would be a bigger deal for Europe, that same spill-over potential exists, and it would be bigger than the overnight example today.
Loan Originator Perspective
Bond markets posted small gains today, despite tepid results for a 5 year treasury auction. Tomorrow brings some "less than top tier" data, as does Friday, but it appears any significant movement won't come until next week, with inflation, employment, and a highly anticipated Fed meeting. I'm cautiously floating files closing in September and beyond, locking August loans for clients with limited risk tolerance. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 3.875%
- 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.